Insolvency proceedings and liquidation of undertakings in Member States

If legal persons or private individuals are unable to pay their debt, insolvency proceedings may be initiated before a court to settle such debts.

 

Kulcsszavak: insolvency proceedings, bankruptcy proceedings, liquidation proceedings, insolvency practitioner, administrator, liquidator, non-contentious proceedings, debtor, creditor, judicial system

Debtors (legal persons or civil society organisations pursuing business activities) are entitled but not obligated to initiate bankruptcy proceedings or liquidation.

Bankruptcy proceedings may be initiated before a court exclusively by the debtor, by filing an application to that effect through its legal representative (lawyer or legal counsel).

Debtors may initiate bankruptcy proceedings if they are under financial circumstances threatening insolvency or if they are already insolvent and intend to enter into an arrangement with their creditors for the payment of their debts or for granting payment facilities or possibly a partial waiver.

The liquidation of the insolvent legal person debtor is ordered by the court — ex officio — in cases defined by the Act, or at the request of creditors if they can demonstrate that the debtor is insolvent and unable to pay its debts as they fall due.

In liquidation proceedings, the court appoints a liquidator to the legal person, who will be responsible for the successful execution of the liquidation procedure. An administrator is appointed in bankruptcy proceedings.

Creditors should lodge their claim to the administrator or the liquidator by attaching the relevant supporting documents.

In bankruptcy proceedings, the administrator facilitates the conclusion of an arrangement with creditors and supervises the operation of the debtor.

If the creditors do not vote for an agreement in the bankruptcy proceedings, the court will initiate liquidation proceedings against the debtor.

In liquidation proceedings, the liquidator takes over the management and representation of the debtor’s undertaking, manages the undertaking’s assets, exercises the employer’s rights over the employees, if necessary applies for state aid to cover wages, and fulfils the tax payment liabilities of the entity undergoing liquidation. Furthermore, the liquidator registers the claims of creditors, carries out the duties of insolvency practitioners and decision preparation tasks for the court, terminates the debtor’s legal relationships, dismisses employees, sells the debtor's assets, prepares the balance sheet and accounts for the liquidation, makes payments to creditors based on the distribution of assets approved by the court and finally proposes the striking-off of the debtor from state registers.

If, during the liquidation proceedings, a debtor fully pays the debts or enters into an agreement with its creditors, the court will terminate the liquidation procedure and the debtor may continue to operate.

If a foreign-based undertaking has a branch in Hungary, insolvency proceedings may also be initiated against the assets located in the country. If the centre of main interest of a foreign-based company is located in another Member State of the European Union, the main insolvency proceedings will be conducted there, and the court decisions of such Member State(s) are automatically recognised by the Hungarian courts. In such case, only territorial insolvency proceedings may be opened in Hungary; domestic creditors may file their claim for the assets of the branch or the establishment.

Creditors failing to lodge their claim within the time limit required by law shall not participate in the bankruptcy or liquidation proceedings or enforce their claim in any other way.

The court shall decide on opening bankruptcy and liquidation proceedings within 15 days and 60 days, respectively.

The time limit for creditors to lodge their claims is 30 days in bankruptcy proceedings and 40 days in liquidation proceedings, but  no longer than 180 days.

In order to initiate such proceedings and file appeals, applicants should use and complete the forms published on the website of the National Office for the Judiciary. Legal persons or private individuals represented by a legal counsellor shall submit the application via electronic means.

Creditors may lodge their claim and the supporting documents to the administrator or the liquidator by mail or by electronic means.

Foreign creditors shall lodge their claim and the supporting documents to the administrator or the liquidator by using the form published by the Commission Implementing Regulation (EU) 2017/1105 of 12 June 2017.

Court fees for initiating the procedure:

The court having jurisdiction over the debtor's registered office

Appeal: to the Curia of Hungary

Information available on the e-Justice portal

https://e-justice.europa.eu/content_insolvency-447-hu-en.do?member=1

 

Date of the description of procedure: 30 April 2020

 

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Act XLIX of 1991 on bankruptcy and liquidation proceedings

Government Decree 75/2018 (20 April) on the tasks required for creating the Insolvency Register

Act XCIII of 1990 on duties (Sections 43, 44 and 47)

Act CXXXII of 1997 on the Hungarian branch offices and commercial representative offices of foreign-registered companies (Sections 19 to 22)


32015R0848 - EN - EUR-Lex - EUR-Lex Regulation (EU) (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings

Commission Implementing Regulation (EU) - EUR-Lex Commission Implementing Regulation (EU) 2017/1105 of 12 June 2017 establishing the forms referred to in Regulation (EU) 2015/848 of the European Parliament and of the Council on insolvency proceedings

CIKFO