HUNGARY Trends and Developments Contributed by: Zoltán Tenk, Andreász Topalidisz and Anna Horvát, TENK Law Office
In addition to payment notices, the court may also establish insolvency and order the launch of the liq - uidation if: • the debtor fails to satisfy its debts by the due date indicated in a final judgment or payment order; • an enforcement proceeding initiated against the debtor was unsuccessful; • the debtor fails to fulfil its payment obligations laid down in a bankruptcy or liquidation settlement agreement, reorganisation plan or a restructuring plan; • the debtor’s bankruptcy procedure has been ter - minated without restoration of solvency (eg, due to the creditor’s unwillingness to negotiate a compo - sition); and • it is revealed during a debtor’s winding-up that the Court order: If the court establishes that one of the insolvency conditions is met, the court issues a deci - sion on the start of the liquidation and ensures its pub - lication in the Company Gazette, which is considered the starting day. Management of company assets: At the start of the liquidation, all debts of the company become due, and the debtor will no longer have the right to dispose of its properties and assets. Instead, management will be handled by the acting liquidator appointed by the court. However, the company’s management and shareholders remain competent to handle other mat - ters of the company (eg, change of registered seat). Liquidator rights: With certain exceptions prescribed by the Bankruptcy Act, the liquidator may terminate or withdraw the agreements of the debtor with imme - diate effect without having to justify such decision or assume any sanctions foreseen by the agreement in question. The liquidator has the main obligation and the authority to sell the debtor’s assets within the rules of the Bankruptcy Act, typically through a bidding pro - cess or auction. The purchase price received is man - datorily distributed to satisfy the creditor claims after settling certain costs (eg, liquidator fees). liabilities exceed the assets. Highlights of the procedure
Other important legal consequences: any prohibition of alienation or encumbrance, as well as any enforce - ment rights over real estates and other assets owned by the debtor will cease as of the start date of the liquidation. Submission of creditor claims Similarly to bankruptcy proceedings, creditors must submit their claims within 40 days from the publica - tion of the liquidation decision. If they fail to do so, the creditors do not lose their right to submit their claims until the 180th day after publication. However, these creditors will only receive satisfaction if all claims of the creditors who registered within the 40 days have been fulfilled. After 180 days from the publication of the liquidation decision, submission of further claims are dismissed. The creditors are also obliged to pay: • a registration fee of 1% of their total claim, of no less than HUF20,000 and no more than HUF400,000; and • the liquidator’s fee reimbursement equal to 0.5% of their total claim of no less than HUF5,000 and no more than HUF40,000. The liquidator examines all creditors’ claims and then: • decides whether the claim is acknowledged or disputed or if the claim must be rejected; and • places the non-rejected claims in one of the credi - tor classes. The Bankruptcy Act establishes a hierarchy among the creditor classes which also determines the order of satisfaction of their claims. Creditor claims in the same class will be satisfied pro rata. Additionally, secured creditor claims (eg, claims secured by liens) are classified as privileged creditor claims, which are satisfied outside the hierarchy among the creditor classes to the extent of the amount claimed.
Set-off in liquidation proceedings (i) Before the start of the liquidation
The debtor may fulfil the creditor’s claim through set- off if the creditor initiated the liquidation with a pay -
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