Corpbank shareholder alleged to have filed €700mn lawsuit against Bulgaria

By bne IntelliNews April 28, 2015

bne IntelliNews -


Shareholders of Corporate Commercial Bank, once Bulgaria's fourth largest by assets, are threatening to sue the state for compensation for allegedly bringing about the bank's collapse. 

A lawyer representing fugitive Bulgarian tycoon Tsvetan Vassilev, the largest shareholder in Corpbank, which was declared insolvent on April 22, has claimed that a fellow shareholder, the Omani State General Reserve Fund (SGRF), has filed a €700mn lawsuit against Bulgaria.

In a statement made to Bulgarian broadcaster TV7 on April 27, Konstantin Simeonov said SGRF’s claim had been filed in an unspecified European country, citing the fund’s distrust of the Bulgarian legal system.

No official confirmation of the claim has been made by either the Bulgarian authorities or the SGRF, which indirectly holds a 30.35% stake in Corpbank via Luxembourg-registered Bulgarian Acquisition Company II S.a.r.L., and Simeonov did not explain why he was the one to announce the news.

Corpbank was taken under central bank administration in June 2014 after a run on the bank promoted by corruption rumours in several Bulgarian media outlets. There is also speculation that the bank’s demise was hastened by large withdrawals of deposits by state-controlled enterprises.

Bulgarian Acquisition Company acquired its stake in Corpbank in January 2009, and is currently the bank’s second largest shareholder after Vassilev’s investment vehicle Bromak. In September 2014, SGRF proposed a bailout deal for Corpbank, according to the Bulgarian National Bank (BNB). If adopted, the plan would have used mainly Bulgarian taxpayers’ money to restructure the bank. Corpbank’s third biggest shareholder - sanctions-hit Russian state-owned VTB Bank with a 9.07% stake - has kept a low profile after saying in June that it had no plans to provide liquidity or capital to the troubled bank.

In addition to the alleged claim from SGRF over Corpbank, Vasilev said in a statement published on his personal website that he planned to take Bulgaria to court. He claimed in the statement that Corpbank was “intentionally attacked with the active cooperation of a number of governmental authorities and institutions, so as to lead it to an artificial bankruptcy".

In particular, Vasilev used the site to lash out at central bank governor Ivan Iskrov and questioned why the BNB granted liquidity support to First Investment Bank, also the victim of a bank run in mid-2014, but not Corpbank.

Simeonov has been at the centre of a PR offensive over the last few days. A video showing Vassilev and Iskrov dancing and singing a popular Bulgarian national song at a party was released the day after the Sofia City Court’s judgement on Corpbank’s insolvency and broadcast on one of Nova TV’s most popular shows. After the video flooded social media, Simeonov appeared on several other TV shows, warning that more videos showing close links between Vassilev other public figures could be forthcoming.

Vassilev fled to Belgrade in September, and the Serbian authorities have so far resisted requests for his extradition. Another of Simeonov’s claims is that Vassilev recently received a death threat and has since been unable to leave his hotel.

Further controversy surrounds the Sofia City Court’s decision in its April 22 ruling to set the date of the bank’s insolvency at the latest possible date of November 6 - the day the BNB revoked its licence.

The BNB said on April 24 that it will challenge the court’s decision on the date of insolvency. “The position of the central bank is that the starting date of insolvency should be September 30, 2014, when [Corpbank] reported negative equity and negative capital adequacy,” the central bank said. 

The decision to set November 6 as the date of insolvency means that transactions with an estimated value of around €450mn made before that date will most likely be considered legally valid, thus favouring selected depositors and reducing the chances for other creditors, including the largest - the Bulgarian state Deposit Insurance Fund – to recover their money.

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