At a closed meeting on Wednesday, Sofia City Court appointed temporary trustees to Balkan Airlines, following an insolvency lawsuit brought against the company by Bulstrad.

The trustees, Ralitsa Tokchieva and Vladimir Petkov, will control and co-ordinate the company's management until the court pronounces the Zeevi Holdings-owned Balkan Airlines insolvent. The court has also frozen the company's assets.

The Bulstrad lawsuit was initiated on Monday by the court in response to the company's claim that Balkan be declared insolvent. This latest developments shed some light on the refusal of Balkan's CEO, Zvi Frank, to remain in the country. Frank was likely aware that Bulstrad would press ahead with its insolvency motion, and that he would have been ordered by the court to remain in the country.

The withdrawal of the Israeli management from Balkan left the company in complete chaos - unable to even make bank transactions. Under normal circumstances, the airline's Chief Accountant and CEO would sign bank orders. With the CEO missing and no one authorised to sign documents in his place, the company was in the odd situation of not being able to use its available resources.

Losses incurred from cancelled Balkan flights will amount to $1.1 million, announced airline spokesperson Victor Melamed on Tuesday. Flights have been grounded since February 12. The total number of passengers affected by those cancellations adds up to 11,266, Melamed said, adding Tuesday's press conference would probably be the company's last as Frank has told him to stop releasing any further information. The company's management also decided to send 70 per cent of the staff, or nearly 2,800 people, on a 30-day unpaid leave on Tuesday.

The Balkan crisis took on an added political dimension this week as the Bulgarian Socialist Party (BSP) requested a meeting with the Prosecutor General to discuss the matter. The move was motivated by the BSP's intention to look into the government's handling of the sales contract and their execution of post-privatisation control with the owner, Zeevi Group. Two other state institutions also came in to add to Balkan's problems. Finance Minister Muravei Radev ordered a tax audit of the company and experts of the National Insurance Institute initiated an independent review of the airline's files.

Before the court's decision to freeze Balkan's assets, no date had been set by which General Electric and ATP could reclaim the aircrafts they had leased to Balkan. The four planes were to be relocated to other airports, but remain on the Bulgarian register, Melamed said on Tuesday.

As the situation around the airline becomes increasingly messy, one key player has remained passive - the owner, Zeevi Holdings. "I am perplexed by the actions of Zeevi Group," said Emanuel Zisman, ambassador of Israel in Sofia during a meeting with the leaders of the union of the pilots on February 17.

Zeevi has been surprisingly silent since announcing last week that they are seeking $230 million in damages from the Bulgarian state on the grounds of breaches in the privatisation contract. At the time, Privatisation Agency Executive Director Levon Hampartsumyan said that the claim filed by Zeevi Holdings was a preemptive measure against possible sanctions by the Bulgarian state. He said Zeevi failed to honour their contractual obligations.

Flight reservation bureaus worldwide report that Balkan is no longer selling tickets and that there is no evidence of the existence of the national carrier. No other airlines will accept the transfers of Balkan passengers.