Hungary: will the security interest vanish when the underlying secured obligations are transferred?
By Gergely Szalóki
The fact that the new Hungarian Civil Code, which entered into force on 15 March 2014, has at last recognised the concept of transfer of contractual position was a welcome development. Previously, a similar effect was achievable through the parallel assumption of debt and assignment of claims, but this solution was problematic in rather complex transactions (e.g. in case a lender wishes to transfer its stake under a credit facility agreement along with all security interests).
Under the new Civil Code, banks are provided with the most obvious solution, as they can simply transfer their contractual positions under a credit facility agreement to the new lender. However, the rules that the new Civil Code provides for the transfer of the security interests securing such credit facility agreement are ambiguous.
With regard to the regulation of the security interests, the new Civil Code stipulates that due to their accessory nature the security interests are to be transferred to the new lender along with the transferred claim without any further actions (i.e. the security interest transfers automatically)…
Click on the link below to read the rest of the Schoenherr briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Schoenherr
Briefings from Schoenherr
The problem in implementing the third pillar of the convention in Austria is that the EU has not yet issued a directive.
A trader must clearly inform consumers in advance about all costs associated with a contract, and other requirements.
Analysis from The Lawyer
Regulators are ramping up the pressure in the aftermath of recession, leaving firms to compete for compliance and restructuring work