HUNGARY Trends and Developments Contributed by: Zoltán Tenk, Andreász Topalidisz and Anna Horvát, TENK Law Office
Moratorium: As a general rule, following the publi - cation, the debtor is granted a payment moratorium for 180 days plus two working days, which may be extended up to 240 or 365 days. However, a certain percentage of the creditors’ approval is required for such an extension. During the moratorium period: • the debtor is exempt from making payments; • the ongoing execution procedures will be sus - pended; • no liens can be enforced; and • contractual partners cannot terminate contracts concluded with the debtor, and they cannot withdraw from the contracts solely on the ground that bankruptcy proceedings have been initiated against the debtor or because the debtor does not pay those debts during the moratorium period (provided that such debts have arisen before the commencement of the moratorium). Appointment of a trustee: In its decision regarding the commencement of the bankruptcy, the court appoints a trustee, who plays a mainly supervisory role over the debtor’s assets. The debtor can consequently only undertake new obligations with the approval of such a trustee and payments from the debtor’s assets can only be made after their sign-off. Generally, bankruptcy proceedings will result in a suc - cessful ending if two conditions are met: firstly, if the debtor has a solid plan to restore their solvency, and secondly, if the creditors are willing to co-operate in reaching a compromise, even if they will likely not receive full repayment. Submission of creditor claims All creditors must submit their claim to the debtor and the trustee within 30 days from the publication of the bankruptcy decision. Creditors also need to pay a registration fee amounting to 1% of the total claim (which will be at least HUF10,000 and no more than HUF200,000) in order to be registered in the bank - ruptcy proceedings. All submitted creditor claims will be reviewed by the trustee with the involvement of the debtor and cat - egorised into different creditor classes. As a result, the
trustee registers the secured and non-secured claims separately: • acknowledged (non-disputed) and non-acknowl - edged claims; • claims of entities and natural persons that have a majority control of the debtor; and • claims arising from debt assumption or certain types of suretyships (if concluded within 180 days prior to the submission of the debtor’s bankruptcy petition). If a creditor fails to submit its claim within the 30-day deadline, no voting rights are afforded during the set - tlement negotiations, thereby losing the opportunity to receive satisfaction of their claim within the bank - ruptcy proceedings. Set-off in bankruptcy proceedings Set-off is not allowed during the moratorium period so as to safeguard the estate. However, set-offs enforced in ongoing lawsuits started before the start of the bankruptcy may be completed, provided that the lawsuit was initiated by the debtor. Settlement with the creditors In bankruptcy proceedings, the debtor may renegoti - ate debts and reach an agreement on more favourable terms with its creditors. If the negotiations between the debtor and the creditors have a positive outcome, a settlement agreement is concluded between the parties, possibly restoring the debtor’s solvency as well as partially satisfying the creditor’s claims. In such composition, the creditors and the debtor lay down the terms and conditions of a debt settle - ment, such as in particular any allowances and pay - ment facilities relating to the debts, on the remission or assumption of certain claims, or any other actions which may be necessary to restore or preserve sol - vency. The first negotiation must be initiated and organised by the debtor within 90 days following the publication of the bankruptcy decision. This is preceded by the preparation of a plan suitable to restore or maintain solvency, along with a proposed draft of the settle - ment agreement to the trustee and the creditors.
188 CHAMBERS.COM
Powered by FlippingBook