The file for insolvency of Moststroy AD, a construction company controlled by billionaire Vassil Bozhkov, is very bad news for the Bulgarian capital market, but comes as no surprise, according to analysts.

The company announced on Thursday that it has filed for bankruptcy after all its bank accounts were frozen because of unpaid debts.

A loan borrowed from the United Bulgarian Bank, a unit of the National Bank of Greece SA, was due on May 31, but the company said it has no money. Its construction machines and other equipment have been seized by Interlease, the company that leased them.

"The news is no surprise for me. Even though the company is heavily in debt and is in the red, this unhappy end was brought about by the majority owner," Hristo Vladimirov, analyst at TBI Invest, a company of TBIH specializing in the investment banking, told local business news portal Investor.bg.

"The developments that we are witnessing do not bid well for the Bulgarian capital market and are not a signal that will restore the confidence of the investors, particularly those from abroad," he added.

According to him most of the companies, which are in debt and in the red, are forced to file for insolvency due mostly to siphoning.

"There is just one word, which can describe this news best, and it is "bad"," says Borislav Nikov, an analyst.

"What happened will certainly have an impact on the other companies, who have no funds to refund their loans. Following this precedent, it will be more difficult to get credits from the banks, while the shares of these companies will be perceived as even more risky and investors will be quick to get rid of them."

Under local legislation a company, which has declared insolvency, can restructure and draw up a rehabilitation plan.

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