In order to execute the Hungarian Economy Protection Action Plan, some provisions of the Hungarian Bankruptcy Act and the Company Registry Act must be applied differently based on a government decree adopted in the end of May 2020 (Government Decree). As a result, during the state of emergency, a creditor may submit an application for the opening of a liquidation proceeding only if the deadline determined by the creditor in the payment notification and the subsequent 75 days expired without any result. In addition, the amount of the claim must exceed HUF 400,000.
As to the Company Registry Act, following the government decree entered into force (i.e. 29 May 2020), the court of registration may not declare the company as wound up in a judicial supervision procedure. Furthermore, in case the tax authority initiates a procedure for declaring a company wound up due to the final cancellation of the tax number of the company, this procedure must be suspended until 31 October 2020.
The ongoing procedures and the current compulsory cancellation procedures (in Hungarian: kényszertörlési eljárás) must also be suspended until the above mentioned deadline. In case the company verifies for the court of registration during the period of suspension that is has reinstated the legal status and its legal operation, eliminating the violation of the law, the court terminates the compulsory cancellation procedure (contrary to the current provisions of the Company Registry Act). The Government Decree also ensures that if the company did not finish the winding-up within 3 years and did not submitted an application for its cancellation, the commencement of the compulsory cancellation procedure cannot be ordered and the company may submit the application for the cancellation until 31 October 2020.
By Lidia Suveges, Attorney at law, KCG Partners Law Firm