State pays millions due to illegal mortgages in "Helio-tour-s" case

The Council of Ministers has allocated 6 million euros from the budget of the National Assembly so that parliament can pay the compensation due to a company associated with Nikolay and Evgeniya Banevi. The obligation arises following a final court decision in a case filed by "Helio-tour-s" AD against the National Assembly and the former Privatization Agency, now the Public Enterprises and Control Agency (PAPC).

The proceedings under the State Responsibility Act began in 2022 and concluded with a final decision by the Supreme Court of Cassation in February of this year. The supreme judges upheld the conclusions of the appellate instances, which in turn upheld the decision of the Sofia City Court.

The total amount that the National Assembly must pay amounts to 2,452,201 euros, with accrued statutory interest for the period from 16.05.2013 to 31.08.2026 reaching 3,522,155 euros. "The accrual of statutory interest on the obligation with each passing day leads to an urgent need for the National Assembly to secure and pay the due compensation," the government press office stated.

"Helio-tour-s" AD filed a claim against the parliament and the Privatization Agency amounting to 9,592,180 BGN, with the sum including significant interest. Separately, the PAPC must pay 327,190 BGN plus the respective interest.

The case is related to a long-standing legal provision that contradicts European Union law. This concerns a text from the Privatization and Post-Privatization Control Act, repealed only in 2015, which allowed the state, through the Privatization Agency, to impose a statutory mortgage on the property of privatized companies in the event of non-fulfillment of obligations under privatization contracts.

The claim was filed against the National Assembly and the Bulgarian body for state property management after the company lost coastal real estate. Mortgages were registered on them to secure the obligations of another company – "Helio". The Sofia City Court adhered to the established practice of the Supreme Court, according to which a third party cannot be held liable for another's debts without explicit consent.

The properties were subsequently sold by a private enforcement agent through foreclosure at significantly undervalued prices. One property has an area of 63,194 sq. m and is located in Chernomorets, "Akladi Heiri" locality. The other has an area of 1,583 sq. m and is located in Sozopol, "Likovunya" locality.

The property in Sozopol was sold for 77,777 BGN, and the one in Chernomorets for 1.7 million BGN, even though its market value at that time exceeded 9 million BGN, as established by a triple judicial expert report.

The court accepted that the National Assembly and the PAPC committed a sufficiently serious breach of European Union law, which caused property damage to "Helio-tour-s" AD. The reason is that the parliament did not timely repeal the disputed provision after Bulgaria's accession to the EU, and it continued to be applied by the state agency.

"The damage to the owner, who is illegally deprived of their property and has lost their right of ownership, is commensurate with the market value of this property at the time of the loss," the court's motives state.