This information comes from the assessment conducted in country for the Bulgaria report, which was published in March 2002.
The Bulgarian insolvency legislation bends over backward to include every possible opportunity for creditor participation. However, this attempt at ultimate fairness undermines the system’s effectiveness, generating lengthy, unnecessary litigation, numerous delays due to excessive exercise of appeal rights, and inconsistent legal standards for major issues such as valuation. The practical aspects of the system are further hampered by involvement of incompetent officials, improper compensation to receivers, inability to abide by legal time triggers within the legislative code, and overburdened judges with largely administrative matters.
The legal regime for collateral law in Bulgaria is essentially sound. The basic law is modern and sophisticated and theoretically permits most types of secured transactions. Although some refinements are needed, the existing laws provide the necessary foundation for the growth of secured credit. Despite these positive findings, development of collateral lending continues to be adversely affected by the lack of efficient and predictable enforcement mechanisms.
Bulgaria has a well-developed framework of antitrust and competition laws. It has only a general state aid law. Its consumer protection policy is weak. It is not clear if the weakness in consumer protection enforcement is because of the framework law or the implementing institution.
The severe economic crisis in1996–1997 forced the government of Bulgaria (GOB) to undertake major economic reforms to create a functioning market economy and an investor-friendly business environment. Nevertheless, when compared with the rest of Eastern and Central Europe, Bulgaria has lagged behind in attracting FDI. The mixed history of economic reforms; poor infrastructure; an underdeveloped financial system; a perception of widespread and extensive government corruption; an uncertain, confusing, and burdensome commercial law environment; and an unreliable judiciary have had a significant negative impact on the flow of FDI into Bulgaria.
