A creditor joined to enforcement proceedings

A creditor who has obtained an attachment over movable assets or a restraint on immovable property as security is deemed to have joined the proceedings when enforcement is directed against the secured asset.

Under Article 459(1) of the Bulgarian Code of Civil Procedure, a creditor in whose favour such an attachment or restraint was granted is deemed a joined creditor when enforcement is directed against the secured asset. The amount allocated to that creditor is retained in the enforcement officer’s account and released to the creditor on production of a writ of execution. In all cases of joinder under Article 459, the basis and amount of the secured claim must have been specified in advance. This follows from Article 395(1), which requires the court to identify the claim secured and its amount. In distributing the proceeds, the enforcement officer must use the basis and amount recorded in the security order, the mortgage deed or the instrument creating the pledge to determine what to set aside. The reservation of a sum equal to the amount specified in the security order, including where security covers only part of the claim under Article 394, is the burden unsecured creditors must bear while the secured debt exists.

Creditors cannot challenge a non-existent claim — one that arose only in appearance, was incorrectly established or has since been extinguished — before the enforcement officer. The officer must give effect to the writs of execution and the certifications recorded in public registers. A dispute about the debt or the security cannot therefore be decided when the proceeds are distributed. It must be brought in separate court proceedings because it concerns the existence of substantive rather than procedural rights. Under Article 464, if an action is brought within one month of presentation of the distribution, payment of the amount allocated to the creditor whose claim is disputed is suspended. This statutory safeguard preserves the practical effect of the court remedy.

This article is not a legal opinion of attorney Mihail Tomov or a lawyer at Markova, Tomov and Partners or advice concerning a particular situation or person. For assistance in an enforcement matter or proceeding, consult a lawyer who practises civil law.