Hungarian insolvency law already knows the concept of avoidance actions. Allowing creditors and liquidators to challenge certain transactions aims to protect the value of the insolvency estate. Although the principles of Hungarian insolvency law are the same as those outlined in the European Commission's proposal for a Directive (i.e. Proposed Directive), there are some aspects which would need to be carefully thought through before they are harmonised.
Are the courts of England and Wales establishing themselves as a flexible forum for cross-border enforceability? Here, we consider this question in light of two recent High Court decisions: Re Silverpail Dairy (Ireland) Unlimited Co. [2023] EWHC 895 (Ch) (Silverpail) and Invest Bank PSC v El-Husseini & Ors [2023] EWHC 2302 (Comm) (Invest Bank).
The success of the recently introduced pre-pack-like rules in Hungary will help determined how the EU Directive on pre-pack sales will be implemented in this country.
Existing pre-pack-like rules
Emergency legislation has introduced important changes to Hungarian insolvency laws that allow the debtor’s business to keep trading during insolvency.
The new rules apply to those debtors who are considered strategically important to the Hungarian economy and to those whose insolvency is declared under other emergency rules.
Hungary has passed an Act that implements EU Directive 2019/1023 on preventive restructuring frameworks, the discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt (amending EU Directive 2017/1132). This new Act was published in Hungary's Official Gazette on 3 June 2021 and will come into force on 1 July 2022.
The Hungarian government has recently introduced a new restructuring tool with the aim of supporting companies suffering from financial difficulties due to COVID-19.
Financially distressed companies will receive an automatic stay while the company puts together a reorganisation plan, which will be supervised by a court and evaluated by a court-appointed expert.
On 1 August 2020, amendments to Act XLIX of 1991 (the Insolvency Code) are scheduled to come into force, which have been designed to promote the cooperation between debtors and creditors in bankruptcies and allow for the use of electronic communications in insolvency procedures.
The key changes contained in the amendments include the following:
Pre-emption right for the Hungarian state
In a bid to assist struggling companies amid the uncertainty brought on by the pandemic, Hungary issued Government Decree No. 249/2020, which amends the Bankruptcy Code and gives companies breathing space while they explore options for rescue.
The changes created by the decree, which came into force on 29 May 2020, will be in effect only during the state of the emergency and include the following:
The Dutch Supreme Court has confirmed the decision of the Amsterdam Court of Appeal, which found that the bankruptcy of the Russian based oil company, Yukos, could not be recognised in the Netherlands because it violates Dutch public policy.
The High Court of Hong Kong refused to allow a Chapter 11 Trustee to disclose a Decision from Hong Kong winding up proceedings in the US bankruptcy court. The US proceedings were commenced to prevent a creditor from taking action following a breach of undertakings given to the Hong Kong court in circumstances where the company had no jurisdictional connection with the US.