Attachment of an interest in a commercial company

Under Article 517(1) of the Bulgarian Code of Civil Procedure, an interest in a commercial company is attached by sending an attachment notice to the Registry Agency. The attachment is registered under the procedure for registering a pledge over a company interest and takes effect upon entry in the Commercial Register maintained by the Agency. Attachment has the consequences specified in Article 451(1) of the Code, including the mandatory prohibition on disposing of the attached right. Under Article 452, a disposition in breach of that prohibition is ineffective against the persons whom the attachment protects. Where the attached interest belongs to a member with limited liability, the prohibition safeguards subsequent steps in enforcement: the enforcement creditor’s notice terminating the debtor’s participation, subsequent authorisation under Article 517(3) and a successful action for dissolution of the company. The restriction on transfer preserves the creditor’s statutory opportunity to obtain payment from the value of the debtor’s interest or, where appropriate, from the debtor’s share of the liquidation proceeds. These steps would be frustrated if, on the date of the notice under Article 517(3), the debtor were no longer a member or had reduced their holding by a disposition under Article 129 of the Commerce Act.

Given the particular substantive and procedural effects of attachment of an interest in a limited liability company, a duly imposed attachment precludes subsequent registration of dispositions by the debtor under Article 129. A transfer agreement takes effect between its parties and binds the company, but until registered it cannot be asserted against third parties acting in good faith. An unregistered circumstance can be asserted against third parties who are not acting in good faith.

This article does not provide a legal opinion or advice about any particular person or situation. For assistance with an individual case, consult a lawyer practising in commercial law.