Pauline action in Bulgaria: Art. 135 ЗЗД and ВКС case law
Guide to the Pauline action under Art. 135 of the Obligations and Contracts Act: elements, ВКС decisions, case law and tactics for creditors.
The Pauline action (Павлов иск, actio Pauliana) under Art. 135 of the Obligations and Contracts Act (ЗЗД) remains one of the most sought-after and most complex remedies for a creditor against a debtor's dishonest acts of disposal. Every practitioner in obligations, commercial and insolvency law meets it sooner or later, and the tight timing of securing the claim and registering it often leaves the lawyer only a few days to react.
The freely available resources on the subject, however, are either academic reviews of outdated periods or superficial blog posts that do not cite the case law of the Supreme Court of Cassation (ВКС). The paid databases keep the most useful annotations behind a subscription. In this analysis we bring together the legal framework under the four paragraphs of Art. 135 ЗЗД, the relevant Interpretative Decisions (ТР) of the General Assembly of the Civil and Commercial Chambers (ОСГТК) of the ВКС (ТР No. 2/2017 and ТР No. 2/2019), the current cassation case law for 2018 to 2025, and practical checklists for protecting the creditor's interest and for the third party's strategy.
❓What are the conditions for a claim under Art. 135 ЗЗД to succeed?
Source: ЗЗД, Art. 135
The legal framework: Art. 135 ЗЗД paragraph by paragraph
Art. 135 ЗЗД regulates what is known as relative invalidity, where the challenged act remains valid between the parties to it but cannot be enforced against the creditor in whose favour the invalidity is declared. The institution has deep Roman-law roots: it bears the name of the Roman jurist Julius Paulus, who formulated the actio Pauliana as a remedy against compensatory transfers by the debtor. In Bulgarian law it is the general means of protecting the creditor's interest in being satisfied, contrasted with the special actions in insolvency and in public enforcement proceedings.
Obligations and Contracts Act (ЗЗД)
Art. 135
Official Bulgarian text
„Кредиторът може да иска да бъдат обявени за недействителни спрямо него действията, с които длъжникът го уврежда, ако длъжникът при извършването им е знаел за увреждането. Когато действието е възмездно, лицето, с което длъжникът е договарял, трябва също да е знаело за увреждането. Недействителността не засяга правата, които трети добросъвестни лица са придобили възмездно преди вписване на исковата молба за обявяване на недействителността. Знанието се предполага до доказване на противното, ако третото лице е съпруг, низходящ, възходящ, брат или сестра на длъжника. Когато действието е извършено преди възникване на вземането, то е недействително само ако е било предназначено от длъжника и лицето, с което той е договарял, да увреди кредитора. Кредиторите, в чиято полза е обявена недействителността, се удовлетворяват от сумата, получена от публичната продан преди третото лице, тогава когато то участвува в разпределението с вземане, произтичащо от обявяване на недействителността.“
The institution must be read together with Art. 134 ЗЗД (the subrogatory action, by which the creditor exercises the debtor's rights in the debtor's place) and Art. 136, item 1 ЗЗД (the privilege for the costs of preserving and realising the property). When the act was carried out during insolvency proceedings, the special actions under Art. 645–647 of the Commerce Act (ТЗ) apply in parallel. For public state and municipal claims, a special procedure is introduced by Art. 216(1) of the Tax and Social Security Procedure Code (ДОПК).
The elements under Art. 135(1) ЗЗД (a claim that has arisen)
The classic case of the Pauline action requires the creditor's claim to have arisen before the prejudicial act. The objective element, the prejudice, can take the form of reducing, cashing in or hiding assets, encumbering them, or creating a privilege in favour of another creditor. It is enough that the act makes it harder or impossible to satisfy the creditor, without requiring the debtor to be fully insolvent.
The structure of proof under Art. 135(1) ЗЗД
A valid claim
The creditor must prove their claim at the time the action is heard. The claim does not need to be due or established by an enforcement title. It is enough that it has arisen.
The prejudicial nature of the act
An act is prejudicial when it reduces, encumbers or hides the debtor's assets in a way that makes it harder to satisfy the creditor. The assessment is made as at the time of the transaction, in view of the overall financial position.
The debtor's knowledge
The debtor's knowledge of the prejudice is a subjective condition which, where the debtor's assets are heavily burdened, is often inferred by presumption from the circumstances.
The third party's knowledge (onerous transactions only)
In an onerous transaction the creditor must also prove the knowledge of the third party (the debtor's counterparty). In a gratuitous transaction this condition falls away.
The constitutive effect of the judgment
The action is constitutive in nature. The creditor has standing as claimant, and the debtor and the third party are the defendants as compulsory co-parties.
The third sentence of paragraph 1 introduces protection for a good-faith third party who has acquired rights for consideration before the statement of claim is registered. This protection does not apply against acquirers who received the property gratuitously or against persons who acquired after registration, which is why registering the statement of claim immediately with the Registry Agency (Агенция по вписванията) is the creditor's lawyer's first procedural task.
The presumption under Art. 135(2) ЗЗД: scope and rebuttal
Paragraph 2 introduces a rebuttable statutory presumption of the third party's knowledge when they are the debtor's spouse, descendant, ascendant, brother or sister. The presumption eases the creditor's burden of proof in onerous transactions within the close family circle, but the list is exhaustive and is not applied by analogy to other categories of related persons, for example cousins, partners in a commercial company or unmarried partners living together.
A strict reading of the circle in paragraph 2
The presumption is rebutted by proof to the contrary. The burden falls on the third party to prove that, despite the kinship, they did not know about the prejudicial nature of the transaction, for example that the debtor contracting with them declared a clean financial position, or that the transaction was concluded at a distance, without knowledge of the current debts. In practice the courts require specific circumstances, not general claims of good faith.
Art. 135(3) ЗЗД: a prejudicial act before the claim arises
When the act was carried out before the creditor's claim arose, the regime is considerably stricter for the claimant. Not just knowledge is required, but intent to harm on the part of the debtor and the third party at the same time. This makes paragraph 3 the hardest set of elements to prove in practice, because the inner state of mind has to be established in relation to a future creditor who has not yet appeared.
| Criterion | Art. 135(1) ЗЗД | Art. 135(3) ЗЗД |
|---|---|---|
| Timing of the act | After the claim arises | Before the claim arises |
| Subjective element of the debtor | Knowledge of the prejudice | Intent to harm |
| Subjective element of the third party | Knowledge (in onerous transactions) | Intent to harm |
| Presumption for relatives | Applies (paragraph 2) | Does not apply |
| Burden of proof | Eased in the paragraph 2 case | Heavy: specific intent is required |
| Protection of good-faith third-party acquirers | Preserved for acquisition for consideration before registration | Preserved under the same rules |
Art. 135(1) vs Art. 135(3) ЗЗД: comparison table
The tactical consequence for the creditor's lawyer is that in every case the exact moment when the claim arose and the moment of the prejudicial act must be established first. The chronology can shift the case from paragraph 1 to paragraph 3 and make the action practically hopeless. That is why, in loan and credit relationships, it is especially important to check whether the claim existed on date X, when the challenged transaction was concluded, even where there are framework agreements or open credit lines.
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Interpretative Decisions of the ОСГТК of the ВКС on Art. 135 ЗЗД
The system of the Pauline action is built to a significant extent on the interpretative case law of the ВКС. Two decisions are of foundational importance and should be in the toolkit of every lawyer working with Art. 135 ЗЗД.
Interpretative Decision (ТР)
ТР No. 2/2017 of 9 July 2019 in interpretative case (тълк. д.) No. 2/2017 of the ОСГТК of the ВКС
Official Bulgarian text
„Основополагащо тълкувателно решение по приложното поле на чл. 135 ЗЗД, включително във връзка с поръчителството и хипотезите на пасивна солидарност.“
Interpretative Decision (ТР)
ТР No. 2/2019 of 26 March 2021 in interpretative case (тълк. д.) No. 2/2019 of the ОСГТК of the ВКС
Official Bulgarian text
„Цесионерът притежава активна материалноправна легитимация за предявяване на иск по чл. 135, ал. 1 от ЗЗД, ако увреждащата сделка е извършена след като е възникнало вземането на първоначалния кредитор – цедента, но преди сключването на договора за прехвърляне на вземането.“
The principle derived from ТР No. 2/2019 is practically important for the claims market. The assignee who buys a claim from the original creditor (the assignor) also inherits the ability to challenge prejudicial transactions made between the moment the claim arose and the moment of the assignment. The transfer of the right of action follows the fate of the principal claim, a solution that gives a substantial additional right to debt-purchasing companies and to insolvency trustees in insolvency proceedings.
Current cassation case law (2018 to 2025)
After ТР No. 2/2017 the ВКС issued a series of decisions on specific questions, which outline the scope of the action and its relationship with the special actions in insolvency and in public proceedings.
Decision of the Supreme Court of Cassation (ВКС)
Decision No. 60082 of 3 September 2021 in commercial case (т. д.) No. 2771/2018, 1st Commercial Division (I т. о.)
Official Bulgarian text
„Съотношение между чл. 135 ЗЗД и специалния иск по чл. 216, ал. 1 ДОПК. Подчертава се изискването за конкретно установено публично задължение като предпоставка за специалния иск, а чл. 135 ЗЗД остава общо средство за защита.“
Decision of the Supreme Court of Cassation (ВКС)
Decision No. 60079 of 1 November 2021 in commercial case (т. д.) No. 876/2020, 2nd Commercial Division (II т. о.)
Official Bulgarian text
„Системата от искове за попълване маса на несъстоятелността съдържа норми с самостоятелен фактически състав. Кредиторът не е длъжен да изчерпи реда на специалните искове по чл. 645–647 ТЗ преди да предяви иск по чл. 135 ЗЗД, ако са налице предпоставките на общата норма.“
Other key decisions for practice include Decision No. 241 of 20 February 2018 in commercial case No. 985/2017, 2nd Commercial Division of the ВКС, which classifies joint and several liability (passive solidarity) as a form of personal security and affects the examination of the creditor's interest where there are several co-debtors, and Decision No. 238 of 15 January 2019 in commercial case No. 2668/2017, 1st Commercial Division, which clarifies the scope of Art. 647(1) ТЗ as regards security transactions in insolvency. At constitutional level, Decision No. 4 of 11 March 2014 in constitutional case No. 12/2013 of the Constitutional Court confirms the institution of relative invalidity as a constitutionally permissible form of creditor protection.
The relationship with the other actions to replenish the estate
Art. 135 ЗЗД is the general remedy, but in special procedures the legislator has provided stronger and/or lighter actions. The creditor must choose the appropriate route tactically, in view of their capacity (insolvency trustee, public creditor, ordinary civil creditor) and the characteristics of the transaction.
| Provision | Standing to sue | Period that can be challenged | Special feature |
|---|---|---|---|
| Art. 135 ЗЗД | Any creditor | No look-back period | Knowledge/intent is required |
| Art. 645 ТЗ | Insolvency trustee, creditors in the insolvency | Suspect period before the opening of proceedings | Performance of an obligation not yet due, set-off |
| Art. 646 ТЗ | Insolvency trustee, creditors in the insolvency | Up to 1 year before the petition | Eased proof of knowledge |
| Art. 647 ТЗ | Insolvency trustee, creditors in the insolvency | Up to 3 years before the petition | Gratuitous transactions, concealed consideration, security |
| Art. 216(1) ДОПК | State, municipalities | No look-back period | Only for established public debts |
| Art. 56 of the Inheritance Act (ЗН) | Creditors of an heir | No look-back period | Challenges a renunciation of inheritance, not a transaction |
Art. 135 ЗЗД compared with the special actions to replenish the estate
In insolvency proceedings the special actions under Art. 645–647 ТЗ give an easier burden of proof and wider sets of elements, but they are tied to suspect periods. State and municipal creditors have Art. 216(1) ДОПК, but it applies only where there is a specifically established public debt. For a creditor who does not fall under the special regimes, Art. 135 ЗЗД remains the only general instrument of protection, and it is often preferred because there are no limiting time limits on the period of the challenged transaction.
Procedural features: jurisdiction, limitation and registration
The procedural framework of the action is at least as important as the substantive law. A mistake in procedure leads to dismissal or to loss of priority against later good-faith acquirers.
5 years
the general limitation period under Art. 110 ЗЗД, which starts to run from the carrying out of the prejudicial act
For immovable property the moment of the act is the date of the notary deed (нотариален акт). Registering the statement of claim immediately with the Registry Agency is critical for protection against later acquirers.
Preparing and bringing a claim under Art. 135 ЗЗД
Subject-matter jurisdiction under the general rules of the Civil Procedure Code (ГПК). For immovable property Art. 109 ГПК also applies (exclusive territorial jurisdiction of the court where the property is located).
Calculating the value of the claim
The value of a constitutive claim for relative invalidity corresponds to the value of the right the protection is aimed at (the value of the property, of the assigned claim, of the gift).
State fee
4% of the value of the claim, under the rules for claims capable of valuation. For claims against several counterparties the fee is calculated for each separate legal relationship.
Registering the statement of claim immediately
Registration with the Registry Agency (for property and other registrable transactions) is critical for protection against later good-faith acquirers under the third sentence of paragraph 1.
Summoning and joining the parties
The debtor and the third party are compulsory co-parties in the proceedings (necessary joinder). A judgment issued against only one of them cannot take effect.
Particular attention must be paid to registering the statement of claim. It is not a procedural formality: it is from the date of registration that the creditor becomes protected against later good-faith acquirers. Late registration often turns the Pauline action into a decorative document against property that has already been cashed in.
A practical checklist for the creditor's lawyer
Preparing a claim under Art. 135 ЗЗД: checklist for the creditor
A systematic check before filing the statement of claim.
Chronology: the exact date the claim arose established against the date of the challenged transaction (this determines whether paragraph 1 or paragraph 3 applies).*
Identify a paragraph 2 case (spouse, descendant, ascendant, brother, sister): it eases the burden of proof through a presumption.*
Gather circumstantial evidence of knowledge/intent: bank statements, correspondence, financial analyses of the debtor at the time of the transaction.*
Check whether the act is registrable: for property, mortgages and other registrable transactions, arrange for filing with the Registry Agency immediately.*
Assess the relevance of the special actions (Art. 645–647 ТЗ, Art. 216 ДОПК, Art. 56 ЗН) and choose the most favourable route for the client.*
For onerous transactions outside the circle in paragraph 2: prepare witness testimony on direct contacts between the debtor and the third party.
Especially important in transactions with economically related persons who do not fall under the family presumption.
Check for parallel proceedings: if insolvency has been opened, the insolvency trustee has exclusive standing for some actions.
An application for interim security under Art. 389 et seq. ГПК (a prohibition on disposal [възбрана], an inventory [опис]) together with filing the statement of claim.
* Mandatory documents
Protecting the third party: strategies for the defendant
The third party's lawyer has several lines of defence. The choice depends on whether the transaction falls under paragraph 1 or paragraph 3 and whether it is onerous or gratuitous.
Lines of defence for the third party
Possible objections to a claim under Art. 135 ЗЗД.
Rebutting the presumption under paragraph 2: proving good faith despite the kinship: a declaration by the debtor of clean assets, distance in communication, independent advisers.
Proving a lack of knowledge in onerous transactions outside paragraph 2: an ordinary market price, a bank loan, good-faith due diligence.
An objection of an accountable transaction (отчетна сделка): if the third party acted under a mandate (a contract of agency, договор за поръчка), the property has not actually left the debtor's assets (patrimony).
An objection of limitation: the 5-year period under Art. 110 ЗЗД starts from the carrying out of the prejudicial act.
An objection of good-faith later acquisition: protection under the third sentence of paragraph 1, if the rights were acquired for consideration before the statement of claim was registered.
Disputing the prejudicial nature: proving that full equivalent value was received in the transaction and the assets have not decreased (hard where what was received has low liquidity).
Note: Art. 135 ЗЗД and Art. 56 ЗН are not interchangeable
Conclusion and key takeaways
Art. 135 ЗЗД is an instrument of universal application, whose weight and effectiveness depend on precise chronology and a timely procedural reaction. The foundational ТР No. 2/2017 and ТР No. 2/2019 of the ОСГТК of the ВКС, together with the cassation case law of 2018 to 2025, shape a clear doctrine: the general remedy under Art. 135 ЗЗД does not yield to the special actions, except in the strictly defined cases of insolvency and public debts, and the assignee has standing over a wide period before the transfer of the claim. The presumption in paragraph 2 remains narrowly interpreted, and paragraph 3 requires an intent that is almost impossible to prove directly.
For the creditor's lawyer the practical conclusion is threefold: check the chronology before classifying the claim, register the statement of claim with the Registry Agency immediately, and choose early between the general and the special actions. For the third party's lawyer the key lies in defending good faith and in limitation. The institution, whose history begins with Julius Paulus in ancient Rome, continues to be one of the most alive remedies in modern Bulgarian obligations law.
For additional context on the limitation aspects we recommend our analysis of absolute limitation under Art. 112 ЗЗД, and for a wider view of ВКС case law, our overview of the interpretative cases of the ВКС for 2026.
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⚠️ Important
Pravko provides legal information, but it does not replace advice from a lawyer. For important legal matters, consult a licensed lawyer.
