HUNGARY Law and Practice Contributed by: John Fenemore, Szabolcs Mestyán, Adrienn Mándoki and Nóra Kertai, Lakatos, Köves & Partners
4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation
turing, Rehabilitation and Reorganisation ) on any historical suspect transactions. In a preventive restructuring ( szerkezetátalakítás ), the involvement of a statutory officer (restructuring practitioner) is not a must. However, in certain cases, one is appointed by the court ex officio. The existing management continues to manage the debtor and the task of the restructuring practitioner is to facilitate the preparation, negotiation and approval of the restruc - turing plan. At the request of the debtor or the creditors, the court may vest the restructuring practitioner with oversight powers. In such cases, the practitioner closely moni - tors the management and must approve any disposal of the assets of the debtor and any new undertakings (other than interim or new financings). Reorganisation and restructuring plans are required to be countersigned by the relevant statutory office - holder (in a preventive restructuring ( szerkezetátalakí- tás ), to the extent one was appointed) and approved by the competent court. 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation Creditors’ Classes Creditors are put into separate classes (voting sepa - rately) in both bankruptcy and preventive restructuring ( szerkezetátalakítás ) proceedings as follows. • In case of bankruptcy: secured and unsecured creditors. • In case of preventive restructuring ( szerkezetáta- lakítás ): (a) secured creditors; (b) business-related creditors (ie, creditors that supply goods and/or services that are essential for the business of the debtor or the restructur - ing, and unsecured interim or new financing creditors); (c) subordinated creditors (eg, creditors that are affiliated with the debtor or whose claims arise from gratuitous transactions); and (d) other creditors.
Generally, the aim of bankruptcy and preventive restructuring ( szerkezetátalakítás ) proceedings is to preserve (or increase, if possible) the assets of the debtor by way of continuing its business while nego - tiations with creditors are ongoing and a composi - tion is agreed. An automatic moratorium applies to all creditors’ claims (with limited exceptions) in case of bankruptcy. On the other hand, in the course of a preventive restructuring ( szerkezetátalakítás ), a moratorium (which can be general or limited to certain creditors) is only ordered by the court at the request of the debt - or. The purpose of the moratorium in each case is to facilitate the continuation of the business of the debtor while negotiations with the creditors are in progress. 2021 Reorganisation Proceedings and preventive restructuring ( szerkezetátalakítás ) proceedings relate to the underlying debtor exclusively and may not be utilised to reorganise a corporate group on a com - bined basis. Having said that, it is possible for affili - ates of the debtor to join the plan (more informally in the case of bankruptcy and formally in the case of a restructuring), but in practice this can only manifest in the undertaking of additional security or other obliga - In case of a bankruptcy, a bankruptcy trustee will automatically be appointed by the court. The pow - ers of the bankruptcy trustee considerably limit those of the management of the debtor. In particular, the approval of the trustee is required for any payments to be made by the debtor and any new undertakings. In certain cases, the court may grant a joint right of representation and a joint right of disposal over bank accounts. The bankruptcy trustee is also required, among others, to send reports on the activities and the financial situation of the debtor and to inform the creditors’ committee or creditors’ agent (see 4.6 The Position of Shareholders and Creditors in Restruc- tions in favour of the agreed composition. 4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation
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