HUNGARY Law and Practice Contributed by: John Fenemore, Szabolcs Mestyán, Adrienn Mándoki and Nóra Kertai, Lakatos, Köves & Partners
1.2 Types of Insolvency The following insolvency proceedings are available under Hungarian law. • Bankruptcy proceedings ( csődeljárás ), a voluntary reorganisation-type of proceedings. • Insolvent liquidation proceedings ( felszámolási eljárás ), which can be commenced by both the debtor and its creditors or in certain cases ex officio. • Preventive restructuring ( szerkezetátalakítás ), a pre - ventive voluntary reorganisation-type of proceed - ings based on EU law. • 2021 Reorganisation Proceedings, a pre-pack type of proceeding ordered by the decision of the Hun - garian government, which prevents liquidation and is intended to facilitate the temporary financing of business entities. 1.3 Statutory Officers Types of Statutory Officers The following types of statutory officers may be appointed in various pre-insolvency and insolvency proceedings. • In the 2021 Reorganisation Proceedings – state- owned liquidator ( állami felszámoló ). • In a preventive restructuring ( szerkezetátalakítás ) – restructuring practitioner ( szerkezetátalakítási szakértő ). • In bankruptcy – bankruptcy trustee ( vagyonfelügyelő ). • In insolvent liquidation – temporary liquidator ( idei- glenes vagyonfelügyelő ), liquidator ( felszámoló ) or special liquidator ( rendkívüli vagyonfelügyelő ), as the case may be. Selection of Officers Statutory officers are generally selected or appointed from a register of authorised insolvency profession - als. In bankruptcy and insolvent liquidations (with the below exception), the court appoints the officer by random selection. In the 2021 Reorganisation Proceedings (and in cer - tain cases in insolvent liquidations), only the state- owned liquidator designated by applicable law may act as statutory officer.
In a preventive restructuring ( szerkezetátalakítás ), the debtor and/or the creditors are entitled to propose the statutory officer. However, in cases where the court appoints the officer ex officio, selection is done via the method set out in the applicable law. Statutory officers can and are replaced in cases where – eg, the incumbent officer should have originally been disqualified (eg, for conflict of interest reasons) or if the officer seriously or regularly breaches its duties under the applicable laws. Rights and Responsibilities of Officers The powers of the bankruptcy trustee considerably limit those of the management of the debtor. In par - ticular, the approval of the trustee is required for any payment to be made by the debtor and for any new legal undertaking. In certain cases, the court may grant a joint right of representation and a joint right of disposal over bank accounts. In the case of liquidation, the liquidator represents the full spectrum of claimants of the insolvent debtor. The sale of assets is generally organised by the liquidator as well by way of a public tender or public auction. Liquidators and creditors have a right to challenge certain historical transactions during hardening peri - ods (see 8.1 Circumstances for Setting Aside a Transaction or Transfer ). As a result, in most circum - stances, liquidation of such assets will be performed by the liquidator. Under Hungarian law, the secured assets remain part of the insolvency estate of an insolvent company. In preventive restructurings ( szerkezetátalakítás ), the existing management continues to manage the debt - or and the task of the restructuring practitioner is to facilitate the preparation, negotiation and approval of the restructuring plan. At the request of the debtor or the creditors, the court may vest the restructuring practitioner with oversight powers. In this case the practitioner closely monitors the management and their approval is required for any disposal of the assets of the debtor and any new undertakings (other than interim or new financings).
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