The new preventive restructuring procedure aims to deal with companies in financial difficulty before serious problems arise. The measures focus on preventing the insolvency of businesses to preserve their viability.
- Following the proposal of the executive officer, the debtor's main decision-making body votes on the proposal for the initiation of the restructuring. If at least three quarters vote in favour of the restructuring, the debtor must file its application for approval to the Metropolitan Court of Budapest.
- The debtor may request the court to order a general moratorium on enforcement of its debts (covering all creditors and claims and published in the Companies Gazette) or a limited moratorium (covering only specific creditors, but confidential, to avoid bad publicity).
- The restructuring plan, containing the agreement of the creditors and the debtor on its debts and obligations, is approved if a majority of the votes and a numerical majority of creditors agree with it.
- A new cross-class cram down procedure may be applied to dissenting classes of creditors and/or members.
- An enforcement order may be issued following the non-performance of a court approved restructuring plan.
- The restructuring procedure is not automatically followed by liquidation proceedings.
The implementation of the EU Restructuring Directive will greatly help companies avoid insolvency and liquidation and comes into force on 1 July 2022.
Find out more
To discuss the new legislation in more detail, please contact a member of our Restructuring & Insolvency team.
Take a look at our European Restructuring & Insolvency online tool to compare the restructuring and insolvency regimes across 23 European jurisdictions.