In March 2020, the coronavirus crisis urged the Hungarian government to introduce extraordinary measures to mitigate the economic consequences. This led to a general moratorium for all retail and corporate financings until the end of 2020. As one of the last measures of 2020, the Hungarian government decided to prolong the moratorium due to the second wave of the pandemic.
Under the first moratorium, capital, interest and fee payment obligations for all loan, credit and financial leasing agreements were suspended in both the retail and corporate sectors. The moratorium was voluntary for borrowers (opt-out) and mandatory for banks, i.e. debtors may continue performing their contractual obligations if they wish to.
In October, the moratorium was extended until 30 June 2021 for certain people in need (e.g. unemployed, pregnant or retired) and companies in financial difficulties. The prolonged moratorium remains voluntary for borrowers and mandatory for banks. It has also been clarified that it is applicable only to lenders having a seat or branch office in Hungary. The moratorium is applicable to contracts concluded before 18 March 2020 and loans that have already been utilised.
Unfortunately, the pandemic did not relent in December. The government therefore decided that the prolonged moratorium will apply not only to the above limited group, but to any debtor who has capital, interest or fee payment obligations arising from a contract concluded on a commercial basis.
By Gergely Szaloki, Partner, and Virag Palguta, Attorney at Law, Schoenherr