HUNGARY Law and Practice Contributed by: John Fenemore, Szabolcs Mestyán, Adrienn Mándoki and Nóra Kertai, Lakatos, Köves & Partners
Lakatos, Köves and Partners Madách Trade Center
H-1075 Budapest Madách Imre út 14 Hungary Tel: +36 1429 1300 Fax: +36 1429 1390
Email: info@lakatoskoves.hu Web: www.lakatoskoves.hu/
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation
Since August 2025, the regulation on reorganisation has changed materially. Reorganisation may be initi - ated only if the Hungarian government declares by decree that the bankruptcy and/or liquidation pro - ceeding of a certain company is of strategic impor - tance (strategically important bankruptcy and/or liquidation) and also obliges the insolvent company to prepare a reorganisation plan, in which case the reorganisation proceedings should be conducted under the regime which was introduced in 2021 (the “2021 Reorganisation Proceedings”). However, some deviations in reorganisation proceedings may be intro - duced by further government Decrees, which have not yet been adopted. A bankruptcy and/or liquidation proceeding may be declared to be of strategic importance (i) where the settlement of the company’s debts and an arrange - ment with its creditors are considered to be of national economic interest or overriding public interest, or (ii) where there is an overriding economic policy interest in ensuring that the company’s dissolution without legal succession is carried out in a faster and more transparent manner. In such cases, a state-owned liq - uidator will act as insolvency officer that is conferred with extra powers, whilst creditors’ rights are signifi - cantly narrowed compared to “normal” liquidation and bankruptcy procedures. Given that the 2021 Reorganisation Proceedings are applicable only in a very limited set of circumstances, this regime will only be discussed in brief.
1.1 Legal Framework Hungarian Insolvency Act
The main piece of Hungarian insolvency legislation is the Hungarian Insolvency Act (Act XLIX of 1991) which regulates the two traditional types of proceedings: • bankruptcy proceedings; and • insolvent liquidation proceedings. Restructuring Act The Restructuring Act (Act LXIV of 2021) was adopted to implement the EU Directive on restructuring and insolvency (Directive (EU) 2019/1023 of the European Parliament and of the Council on preventive restruc - turing frameworks, on discharge of debt and disquali - fications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132). The “preventive restructuring” ( szerkeze- tátalakítás ) procedure was introduced by Act LXIV of 2021 and was designed to help businesses in financial distress avoid formal insolvency. Other Proceedings As a response to the negative effects of the COVID-19 pandemic on the Hungarian market, in April 2021 a new procedure (reorganisation proceeding) was intro - duced by the Hungarian government and later con - firmed and extended by the Hungarian Parliament with the aim of supporting Hungarian businesses.
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