Svetlina Kortenska, Senior Counsel at our member firm BOYANOV & Co., contributed an article for the Expert Review of the January issue of CEELM Magazine under the title “Close-Out Netting Legal Framework of Bulgaria to Mitigate Credit Risks”.
Bulgaria amended its FCCONA law (effective August 19, 2025) to establish a clear and comprehensive legal framework for close-out netting, aligning national rules with EU CRR2 requirements. The reform fills previous legal gaps by recognising close-out netting as an independent risk mitigation tool, separate from financial collateral, and broadens its scope to cover various financial and non-financial transactions and counterparties. It clarifies how netting clauses operate, ensures their enforceability even during insolvency or reorganization proceedings, and protects them from invalidation. Overall, the changes enhance legal certainty and enable financial institutions to more effectively manage and reduce credit risk.