Liquidation Lawyer in Hungary

The purpose of liquidation is to satisfy creditors in the manner prescribed by law.
Liquidation proceedings may be initiated at the request of the debtor, a creditor, the liquidator, the company court, or a court acting in a criminal matter.

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If a creditor requests the commencement of liquidation proceedings, the application must specify the legal basis of the debtor’s debt, its due date, and the reasons why the creditor considers the debtor to be insolvent. The debtor is obliged to submit a statement to the court within 8 days indicating whether it acknowledges the claims set out in the application and whether it requests a grace period for settling the debt.

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The court may grant a maximum payment deadline of 45 days for the settlement of the debt. The court establishes insolvency if the debtor fails to settle the debt within 20 days following the expiry of the due date, or if the debtor neither disputes nor settles the debt despite a creditor’s payment demand, or if the debtor fails to settle the debt beyond the performance deadline established in a final court decision, enforcement has proven unsuccessful, and the debtor has failed to satisfy creditor claims despite a bankruptcy settlement.

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The detailed rules of liquidation are set out in Act XLIX of 1991 on Bankruptcy Proceedings and Liquidation Proceedings (the “Liquidation Act”). The duration of liquidation proceedings may not exceed two years.

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How Does the Liquidation Process Work in Hungary

Once the court order establishing insolvency becomes final, the court appoints the liquidator and publishes the commencement of the liquidation proceedings in the Company Gazette.

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Within 30 days from the commencement of liquidation, the managing director must cooperate with the liquidator and hand over the company’s accounting records, asset information, contracts and other documents required for the proceedings.

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• the closing balance sheet, closing inventory, and general ledger extract;

• detailed lists of the company’s assets (real estate, vehicles, inventories, equipment, other assets, receivables, securities, business shares, cash and cash equivalents), as well as a statement specifying the physical location of such assets;

• final tax returns;

• an environmental protection declaration;

• a statement on whether the company employs any employees (active or inactive);

• a statement on whether any litigation is pending against the company or initiated by the company;

• a register of the company’s active contracts and copies of such contracts.

 

Creditors should report their claims to the liquidator within 40 days from the publication of the liquidation order. The liquidator registers and assesses the reported claims, reviews the debtor’s financial position, collects receivables and manages the debtor’s assets during the proceedings.

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After the expiry of 40 days from the publication of the initiating court order and until the submission of the liquidation closing balance sheet, the debtor and the creditors may enter into a settlement agreement at any time, which must be submitted to the court for approval.

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During liquidation proceedings, the debtor and its creditors may reach a settlement concerning the satisfaction of creditor claims. Any such settlement must meet the statutory requirements and be approved by the court.

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If no settlement is reached and the liquidation proceedings are not otherwise terminated, the liquidator prepares the liquidation closing balance sheet and the proposal for the distribution of the debtor’s remaining assets. The court then concludes the liquidation proceedings and orders the termination of the debtor in accordance with Hungarian law.

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The managing director’s personal liability is not automatic. However, legal proceedings may be brought to establish liability if, after the company became threatened with insolvency, the managing director failed to perform management duties with due regard to creditors’ interests and this contributed to a reduction of the company’s assets or prevented creditor claims from being fully satisfied.

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