Insolvency 2025

HUNGARY Law and Practice Contributed by: John Fenemore, Szabolcs Mestyán, Adrienn Mándoki and Nóra Kertai, Lakatos, Köves & Partners

Creditors Creditors must register their claims with the liquida - tor to be eligible to seek recovery and to avoid loss of their claims. In the process of enforcement of law - ful claims, the liquidator represents the full spectrum of claimants of the insolvent debtor which, in certain cases, may result in a conflict between the interests of the liquidator and the creditors. Under Hungarian law, liquidators and creditors have a right to challenge certain historical transactions during hardening periods (see 8.1 Circumstances for Setting Aside a Transaction or Transfer ). The secured assets remain part of the insolvency estate of an insolvent company. As a result, in most circumstances, liquida - tion of such assets will be performed by the liquidator. Set-off rights are limited. Creditors may form a creditors’ committee if at least one-third of all creditors that registered their claims within the applicable deadline holding at least one- third of eligible creditor votes joins it. The committee makes its decisions by majority votes. Alternatively, creditors may decide to elect a creditors’ agent who has the functions and powers of the committee. The creditors’ committee or creditors’ agent repre - sents the relevant creditors before the court and in communication with the insolvency practitioner, and has the right to obtain certain information. The liquida - tor is required, among other things, to send quarterly reports on its activities; the financial situation of the debtor; and the costs of liquidation. The approval of the committee or agent is required for the extended continuation of the debtor’s busi - ness. The committee or agent has consultation rights in respect of the timing of the sale of assets and may make observations regarding the valuation report and the accounts to be prepared by the liquidator in the course of the proceeding. In an insolvent liquidation, secured creditors gener - ally enjoy preferential ranking in the order in which the claims of creditors are satisfied from the proceeds of the liquidation. However, certain claims (eg, costs and fees arising in connection with the liquidation, employees’ salaries and similar payments) rank ahead

• the conclusion of the agreement is also supported by two-thirds of the secured creditors. Conclusion With the Deletion of the Debtor In the event of the completion of the sale of all assets of the debtor, the liquidator distributes the income between the creditors. As a main rule, income from the sale of a secured asset should be distributed to the creditor who has security over the relevant assets. All other income (if not enough to satisfy all creditors) should be settled in accordance with a waterfall pay - ment mechanism as described in the relevant legisla - tion. 5.4 The Position of Shareholders and Creditors in Liquidation Member of the Debtor Directors of a Hungarian company are not under an obligation (and are not entitled without the prior approval of the shareholders) to commence insolven - cy proceedings against the company even in finan - cially distressed situations. However, in certain cases prescribed by law that indicate financial difficulties, it is the duty of the directors to inform the sharehold - ers and convene a shareholders’ meeting so that the necessary steps can be taken. These potential steps include: • the making of supplementary contributions by the shareholders to cover losses; • any other steps ensuring that the amount of equity capital reaches the amount of registered capital; or • reduction of the registered capital. If, for any reason, shareholders do not take such steps, they are required to resolve the company’s transformation, merger, division or dissolution with - out succession. Where the shareholders of the company resolve to open a solvent liquidation and the liquidator finds that the assets of the company are not sufficient to cover its debts, the liquidator will, to the extent the share - holders fail to pay an additional amount that covers the debts within 30 days, be required to file for insol - vent liquidation without delay. Failure to do so may result in civil law liability.

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