HUNGARY Law and Practice Contributed by: John Fenemore, Szabolcs Mestyán, Adrienn Mándoki and Nóra Kertai, Lakatos, Köves & Partners
of secured creditors (see 5.3 The End of the Liquida- tion Procedure(s) ). Enforcement In an insolvent liquidation, all claims and security may only be collected and enforced within the rules of that proceeding (which is highly regulated and generally controlled by the liquidator), with the exception of security deposits over cash or securities taken prior to the opening of the liquidation, which may be seized by secured creditors within a limited time period (see 2.3 Secured Creditors ). 6. Cross-Border Issues in Insolvency 6.1 Sources of International Insolvency Law As an EU member state, the EU Insolvency Regulation (Regulation (EU) 2015/848 of the European Parliament and of the Council on insolvency proceedings) directly applies in Hungary. In the context of non-EU member states, domestic Hungarian conflict laws apply. 6.2 Jurisdiction The criteria to determine which country has jurisdic - tion to open an insolvency procedure are primarily based on the debtor’s centre of main interests (COMI). See 6.4 Recognition and Enforceability . 6.3 Applicable Law The EU Insolvency Regulation and the Hungarian Act on Conflicts Law (Act XXVIII of 2017) contain the rel - evant criteria to be used to determine which domes - tic law applies to restructuring and insolvency-related matters. 6.4 Recognition and Enforceability Recognition Regarding Debtors Domiciled in an EU Member State For debtors located within an EU member state, main and secondary insolvency proceedings (to the extent those are of a type listed in the Insolvency Regulation) are automatically recognised if: • the courts of the member state in which the COMI is situated have jurisdiction to open the main insol - vency proceedings; and
• the courts of another member state have jurisdic - tion to open secondary insolvency proceedings against the same debtor but only if it possesses an establishment within the territory of that other member state. Hungarian courts may only refuse to recognise such foreign insolvency proceedings if the effects of such recognition or enforcement would be manifestly contrary to public policy, in particular the fundamental principles or the con - stitutional rights and liberties of the individual in Hungary. Recognition Regarding Debtors Domiciled in a Third Country For debtors whose registered seat is outside Hunga - ry, have no permanent establishment in Hungary and whose COMI is not otherwise in any of the EU mem - ber states, foreign insolvency proceedings may be recognised in Hungary to the extent that there exists reciprocity between Hungary and the relevant jurisdic - tion, and the underlying proceedings is not contrary to public policy and was ordered in a manner that complies with certain procedural guarantees (eg, the relevant foreign court had jurisdiction; the underlying judgment or order is final; the principle of res judicata was not violated; the underlying judgment or order was given in default of appearance and the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable them to arrange for their defence). The recognition of a foreign main proceeding does not preclude Hungarian courts from ordering a second - ary insolvency proceeding. If a secondary insolvency proceeding is commenced, the judgment or order that instituted the main proceedings will not have the same legal effects in Hungary as it would in its jurisdiction of origin. The absence of detailed rules in this area means it is unfortunately unclear what this means in practice and what actual effects such judgment or order would have in Hungary. Recognition and Enforcement of an EU Judgment As per applicable EU laws, judgments handed down that concern the course and closure of insolvency
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