Will Securing Syndicated Loans Be Easier In Hungary?

From 15 March 2014, Hun­gar­ian law will recog­nise the con­cept of trust, and the prob­lems with secur­ing syn­di­cated loans under Hun­gar­ian law seem to be solved.

The cur­rent sit­u­a­tion under Hun­gar­ian law

If a syn­di­cate of banks pro­vides funds to the debtor, usu­ally the secu­rity trustee, being a mem­ber of the syn­di­cate, holds in trust the secu­rity interest(s) estab­lished over the assets of the debtor on behalf of the other syn­di­cate mem­bers. So far, the imple­men­ta­tion of this struc­ture has been dif­fi­cult under Hun­gar­ian law.

What is the prob­lem with secur­ing syn­di­cated loans under Hun­gar­ian law?

Secu­rity inter­ests in Hun­gary are gen­er­ally sub­ject to a reg­is­tra­tion require­ment (with lim­ited excep­tions). How­ever, as Hun­gar­ian law does not recog­nise the con­cept of trust, the trustee can­not hold the secu­rity inter­est on behalf of other syn­di­cate mem­bers, mean­ing that only reg­is­tered lenders become