Bulgarian Business Hits Rock Bottom - Study

Bulgarian private law enforcement officers expect to collect by the end of 2012 over BGN 1 M from indebted businesses. File photo

The business in Bulgaria has hit rock bottom with 50% of businesses facing law suits over unpaid debt.

The data comes from a study for the first half of 2012 of the Chamber of Private Law Enforcement Officers, cited by the Bulgarian Standard daily.

Hotel owners, construction businesses and merchants have the most debt.

106 000 law suits have been filed since the beginning of the year and expectation are they will exceed 200 000 by its end, which is 20% higher, compared to previous years.

Over the huge accumulated obligations from one company to another, more and more businesses sue each other instead of banks, whose share in the filed cases is just 31%.

The private law enforcement officers expect to collect by the end of 2012 over BGN 1 B from indebted businesses, meaning only BGN 100 000 will enter State coffers in the form sales fees and Value Added Tax, VAT.

In 2011, law suits for BGN 1.7 B were filed. Private law enforcement officers have collected a total of BGN 2.8 since 2005, the year of their establishment, while the amount will topple BGN 1 B only in the course of 2012.

The southern city of Stara Zagora is first by the number of bankruptcies and ranks second, only after the capital Sofia, by the number of sold foreclosed properties.

Blagoevgrad is third, mainly because of hotels in the winter resort of Bansko, followed by Plovdiv, Varna and Burgas.

Most of the sales are those of hotels – for nearly BGN 40 M in the first six months of 2012, followed by commercial properties – offices, production shops, stores – BGN 14 M.

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