In a bid to assist struggling companies amid the uncertainty brought on by the pandemic, Hungary issued Government Decree No. 249/2020, which amends the Bankruptcy Code and gives companies breathing space while they explore options for rescue.
The changes created by the decree, which came into force on 29 May 2020, will be in effect only during the state of the emergency and include the following:
- An additional 75 days will be given for a debtor company to settle debts with creditors. A creditor can still file for insolvency if the debtor company disputes previously undisputed and acknowledged debts within 20 days of their due date, and fails to repay this debt upon receipt of the creditor’s written payment notice. The creditor, however, must then wait an additional 75 days from the final deadline for payment given to the debtor company via a payment notice.
- The debtor company can request a court to grant a maximum 15-day moratorium (except if a bankruptcy moratorium was given to the debtor before the creditor filed for insolvency) to pay the debt despite the 45-day period available before the amendments.
- The statutory minimum amount that creditor can claim (without interest and fees) increases from HUF 200,000 to HUF 400,000.
In addition, if the tax authority withdraws the tax number from a company and initiates a procedure, which may result in termination of the company, this procedure will be suspended until 31 October 2020.
Lastly, certain ongoing forced-deletion procedures, including procedures not yet opened with a final and binding decision, will be suspended until 31 October 2020. If a company verifies that the breach of company law has been remedied, a court will terminate the forced liquidation procedure. If a company, however, cannot finish its voluntary solvent dissolution within three years, a court will not open the forced-liquidation procedure and the company will be able to continue the dissolution until 31 October 2020.
Importantly, these rules do not apply to procedures opened after the rules come into force.
For more information on this decree and government relief measures during Hungary's state of emergency, contact your regular CMS advisor or local CMS experts: Erika Papp and/or Szabina Soptei.