How Does Restructuring Work In Hungary? What Does The Hungarian Restructuring Act Hold In Store?

There has been a longstanding need in Hungary for a legal instrument to rescue distressed companies. The only legal solution so far for such companies was the unpopular and inflexible bankruptcy procedure, which is also risky for the debtor, as failure will automatically turn into a liquidation proceeding and the company will cease to exist. Bankruptcy, with its formalistic procedures and limited involvement of creditors in the decision-making, has done more harm than good. It also usually stigmatised the debtor.  The fact that only a few dozen bankruptcies are launched each year illustrates its unpopularity.

The Hungarian Restructuring Act

The Hungarian Restructuring Act, which will enter into force in July 2022, appears to provide the legal framework that has been missing. One of the great advantages of restructuring is that the procedure is mostly controlled by the parties and the court has limited competence. This gives the parties a flexible tool to keep the