Liquidation of strategic companies in Hungary
The Hungarian Act on Bankruptcy and Liquidation Proceedings (hereinafter referred to as the Liquidation Act) contains special rules on bankruptcy and insolvency procedures for major economic companies carrying out strategically important activities (for example, the liquidation of the previous Hungarian airline MALÉV is subject to these rules). The Liquidation Act defines these companies as such pursuing activities relating to state defence, national security, energy safety, public health, environment, basic food supplies and so on, or carrying out major national projects or being responsible for providing public services.
The bankruptcy procedure commences by court order upon the petition of the debtor, whereas in case of a liquidation procedure also any debtor is entitled to file such petition. Within 15 days as of the commencing date of the bankruptcy procedure (date of publication of the final court decision ordering the bankruptcy in the company gazette) the Hungarian government is entitled to qualify the insolvent company by governmental regulation as a strategic company. This deadline is 365 days in case of a liquidation procedure.
Within three days as of the publication of the governmental regulation the competent court has to recall the former receiver or liquidator and appoint the new receiver or liquidator, who may only be a state-owned non-profit organisation (the ‘state liquidator’). Given the broad definition of strategically important companies, the government has a wide area of discretion for its decision…
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