CASE OF BOYADZHIEVA AND GLORIA INTERNATIONAL LIMITED EOOD v. BULGARIA
Violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions)
André Potocki;Angelika Nußberger;Mārtiņš Mits;Yonko Grozev;Gabriele Kucsko-Stadlmayer
5. The first applicant was born in 1954 and lives in Sofia. The second applicant was registered in 1992 and has its registered place of business in Sofia. 6. At the time of the events in question the first applicant was registered as a sole trader. At that time the main commercial activity of the two applicants was trade in medicaments. 7. In February and March 2006 the first applicant sold medicaments to a company called K., for which she was paid 22,043.23 Bulgarian levs (BGN), the equivalent of 11,275 euros (EUR), in total. 8. Between December 2005 and April 2006 the second applicant also sold medicaments to K., receiving a total of BGN 33,344.05 (the equivalent of EUR 17,055) by way of payment. 9. In September 2006 other companies which were creditors of K., including E., applied for the commencement of insolvency proceedings against K. Their request was allowed in a judgment of 17 November 2006 of the Plovdiv Regional Court (hereinafter “the Regional Court”), which declared company K. insolvent, opened insolvency proceedings and appointed a trustee. It noted that K. had ceased its payments to E. and other creditors in October 2005, and held that the initial date of the company’s insolvency was therefore 30 October 2005. 10. In January 2007 the trustee prepared the first list of K.’s creditors, which included company E. 11. In May 2007 company E. brought proceedings against the first applicant under section 646(2) of the Commerce Act, as in force at the time (see paragraph 25 below), seeking to have the payments K. had made to her during the so-called “suspect period” – the period between the initial date of insolvency as declared by the Plovdiv Regional Court and the commencement of the insolvency proceedings (the payments described in paragraph 7 above) − declared null and void and the sum received by her returned to the insolvency estate. 12. The action was allowed in a judgment of the Regional Court of 31 October 2007. Observing that it was undisputed that K. had paid the first applicant BGN 22,043.23 during the “suspect period”, and without analysing the matter any further, it ordered her to pay back this sum to the insolvency estate, plus default interest. 13. That judgment was upheld on 12 March 2008 by the Plovdiv Court of Appeal (hereinafter “the Court of Appeal”). 14. The Court of Appeal’s judgment was enforceable and, at the request of K.’s trustee, a bailiff opened enforcement proceedings against the first applicant for the sums due to the insolvency estate. In December 2008 the applicant settled that debt, which also included interest and costs and expenses related to the enforcement proceedings. 15. In the judicial proceedings against the first applicant, in a final decision of 21 January 2009 the Supreme Court of Cassation refused to accept for examination an appeal on points of law lodged by her. 16. In April 2007 company E. brought proceedings against the second applicant under section 646(2) of the Commerce Act, as in force at the time (see paragraph 25 below), seeking to have the payments K. had made to it during the “suspect period” between 30 October 2005 and 17 November 2006 (payments described in paragraph 8 above) declared null and void and the sum received by the applicant returned to the insolvency estate. 17. The action was allowed in a judgment of 23 January 2008 of the Regional Court. While it acknowledged that the transactions between the second applicant and K. had not damaged the latter’s interests, because K. had received equivalent goods in exchange for its payments to the applicant, the Regional Court added that the Commerce Act “did not take account” of such considerations. It thus ordered the second applicant to pay back to the insolvency estate the sum of BGN 33,344.05, plus default interest. 18. Upon appeal by the second applicant, on 10 June 2008 that judgment was upheld by the Court of Appeal, which stated once again that section 646(2) of the Commerce Act did not require any proof that the contested payment had damaged the interests of K.’s remaining creditors; such damage, as well as the knowledge about it, were to be considered “presumed”. 19. Since the Court of Appeal’s judgment was enforceable, a bailiff opened enforcement proceedings against the second applicant for the sums owed by it to the insolvency estate. The second applicant settled that debt, which included interest and costs and expenses related to the enforcement proceedings, in October 2008. 20. In the main judicial proceedings against the second applicant, in a final decision of 29 July 2009 the Supreme Court of Cassation refused to accept for examination an appeal on points of law lodged by it. 21. In the insolvency proceedings against K., the majority of its assets were distributed among its creditors between November 2007 and October 2008. In two decisions delivered in November and December 2008 the trustee in bankruptcy added the State to the list of creditors, with claims exceeding BGN 5,000,000. As the State was a privileged creditor, almost all payments from the insolvency estate after that were made to it, but a substantial proportion of the debts owed to it by K. nonetheless remained unpaid. 22. The applicants did not make use of the possibility afforded to them by section 648 of the Commerce Act (see paragraph 29 below) to join the insolvency proceedings as creditors of K. Two other companies in a similar situation – they had also been obliged to return sums to the insolvency estate on the basis of section 646(2) of the Commerce Act – did join the insolvency proceedings, but received no part of the sums owed to them. 23. The insolvency proceedings continued until 2014, when company K. was wound up.