HUNGARY Trends and Developments Contributed by: Zoltán Tenk, Andreász Topalidisz and Anna Horvát, TENK Law Office
TENK Law Office H-1124 Budapest Csörsz u. 49-51. 3rd floor Hungary Tel: +36 1 700 4400 Email: office@tenklaw.com Web: www.tenklaw.com/hu
Market Highlights Insolvency in numbers
in which Hungary made considerable investments in recent years. A total of 27,729 bankruptcy (64) and liquidation (27,665) cases were concluded in 2024, either by a composition (settlement) or the liquidation of the busi - ness entity where the average duration of said proce - dures is six to 12 months. At present, no reliable aggregate data is available regarding restructuring or reorganisation proceedings, since these proceedings are not, in all cases, pub - licly accessible; however, it can generally be stated that restructurings and reorganisations still have not gained the trust of Hungarian market participants, and their numbers therefore remain low. This is aptly illustrated by the fact that as of April 2024, only a sin - gle public restructuring had been initiated in Hungary since the entry into force of the underlying legislation. Furthermore, only 23 reorganisation proceedings have been lodged, 12 of which were approved by the court and 20% of these reached the stage of court approval by April 2024. It seems fair to draw the conclusion that corporate reorganisations and restructurings have not yet gained traction in Hungary. Consequently, we will not detail the applicable regulations but will summa - rise the highlights deemed relevant. In 2024, the two sectors most affected by liquidation proceedings were trade and construction, despite both experiencing a decline in case numbers compared to 2023. More than half of all liquidation proceedings in Hungary originated from these two sectors in 2024. The least affected sectors are human health and social work activities, followed by education. Additionally, the above trends have been accompanied by a 10%
Compared to the outstanding case numbers recorded in 2023, the number of initiated insolvency proceed - ings in Hungary showed a slight decline in 2024. In comparison to the 27,796 bankruptcy and liquidation cases registered in 2023, only 23,739 insolvency pro - ceedings were initiated in 2024. While this represents a 14.38% decline, the case numbers remain high within the CEE region. Among the initiated insolvency proceedings, liquida - tion proceedings continued to dominate the land - scape of insolvency cases in Hungary, with 23,679 such proceedings initiated, compared with only 60 bankruptcy proceedings. These figures comprise all the requests filed with the courts which may not have evolved into a full- blown procedure. However, more conservative figures published by Coface still indicate an alarmingly high number of full-blown liquidation proceedings (15,258), especially given that Hungarian cases account for one-third of all liquidation proceedings initiated within the CEE region (45,938). Furthermore, the domestic insolvency rate in Hungary stood at 3.02% – a fig - ure considered high by international standards, even despite the overall decline in case numbers. One may explain the relatively high case numbers by a weaken - ing governmental and corporate investment appetite and a higher interest rate environment compared to recent years. The situation is further aggravated by the volatility of the Hungarian currency (HUF), the weak economic performance of Hungary’s main export part - ners, especially Germany, and the downturn in both the automotive and battery manufacturing industries
185 CHAMBERS.COM
Powered by FlippingBook