Changes In Hungarian Bankruptcy Rules

In this article, we provide a brief overview of the some of the most important new rules applicable to Hungarian bankruptcy proceedings after 1 September 2009.

Under Hungarian law, bankruptcy is a procedure during which the debtor is granted a moratorium with a view to increasing the chance of a settlement agreement and during which the debtor attempts to reach a settlement with the creditors.

Pursuant to Act no XLIX of 1991 on Bankruptcy and Liquidation Proceedings (the "Bankruptcy Act"), both a debtor and a creditor may initiate a bankruptcy procedure. However, it is worth noting that if the creditor initiates the procedure, this can only be successful if the debtor approves it and the debtor's supreme body consents to the bankruptcy procedure. Taking this into account, it is dubious how often a bankruptcy will be ordered based on a creditor's request. The examination of bankruptcy procedure initiated by creditors falls outside the scope of this article.