The Act outlines certain insolvency law reforms in response to the COVID-19 crisis, including a temporary suspension of wrongful trading provisions for company directors. The suspension applies retrospectively from 1 March 2020 until 30 September 2020, and aims to encourage directors to continue to trade during the pandemic.

This change will not affect the directors’ duties regime. Directors must continue to comply with their duties, in particular those owed to the company's creditors where the company is, or is likely to be, insolvent.

The Government of Hungary has proposed an amendment to Act XLIX of 1991 on bankruptcy and liquidation proceedings (Insolvency Act) aiming to modernise the procedural rules of insolvency proceedings, for example by introducing communication via email and video conferences.

Technical reliefs

The Corporate Insolvency and Governance Bill (CIGB) was introduced to Parliament on 20 May 2020 and includes measures both as a response to COVID-19, which apply temporarily, and measures which apply permanently, part of a long-planned package of insolvency reform measures.

Status as of 09/06 12:00 CET

Table of contents

On 28 May 2020, the Hungarian Government adopted amendments to the laws on company liquidation and forced deletion procedures to cushion the impact of the global coronavirus pandemic on the economy.

1. Changes related to liquidation

Liquidation is initiated when a company is unable to meet its financial obligations and pay off its debt. However, in Hungary, the courts do not apply an actual insolvency test before ordering liquidation but check only whether certain criteria have been met.

Status as of 16/09       

Table of Content

Pursuant to paragraph 11 of the order of Mr Justice Foxton dated 20 May 2020 (the ‘Order’), the Viscount of the Royal Court of Jersey (the Fifth and Tenth Respondent) has, on the request of Harbour Fund II LP (the Seventh Respondent), instructed Addleshaw Goddard to post a copy of Schedule 4 to the Order on its website.

Schedule 4 of the Order reads as follows:

CLAIM NO: CL-2017-000323

Key insolvency provisions: a practical guide to what has changed and why

TEMPORARY PROVISIONS

1. SUSPENSION OF WRONGFUL TRADING PROVISIONS

What's changed?

WHAT DUTY?

WHAT DOES IT MEAN?

WHEN DOES IT APPLY?

Maintenance of solvency Management of business risks

Included in this update: Corporate Insolvency and Governance Bill introduced to Parliament; FRC updates guidance on corporate governance and reporting and more...

Corporate Insolvency and Governance Bill introduced to Parliament