Facilitation of the enforcement of creditors’ claims, more effective procedure
On June 26 2017, new EU Regulation 2015/848 entered into force. This has brought about significant changes in Hungarian cross-border insolvency proceedings. The main purpose of the Regulation is to simplify enforcement of creditors’ claims and to increase overall effectiveness. In order to comply with the Regulation, several points of Hungarian insolvency law have been amended. In amending the insolvency law the definition of economic operator is now given and a new definition of “insolvency practitioner” has been introduced to cover liquidators, administrators and foreign insolvency practitioners.
The Regulation requires Member States to establish insolvency registers for cross-border insolvency cases so that creditors with an address or seat in another Member State will have easier access to information. The insolvency register in Hungary will contain data on insolvency proceedings initiated from June 26, 2018. Besides mandatory information the register will also contain data on initiation and termination of appellate action relating to the debtor's assets, the name of the court and the case file or indications of declaratory action concerning the interests of creditors against the head and former head of the debtor, or against members and owners of a legal person in its capacity of debtor. In addition, the electronic address of the debtor, the administrator and the liquidator will be indicated as well as whether the proceedings are simplified. The insolvency register will maintain data for fifteen years from registration. Subsequently, data will be archived for another five years and after that will be deleted immediately.
It is a significant change that the amended insolvency law expressly requires foreign insolvency practitioners to register initiation of the main insolvency proceedings in the land register and in other public registers if the debtor owns real estate in Hungary or other registered assets are registered with a public register or if the debtor owns a business location related to which a right or fact is registered with a public register. The foreign insolvency practitioner and the debtor are liable for failure to do so if the debtor can still dispose of its assets.
If a company group has insolvency proceedings under way in several member states, then the competent insolvency practitioners may conclude a looser formal (or informal) cooperation agreement. However the insolvency procedure can also take the form of a group coordination process, i.e., more formally. According to the Regulation, every insolvency practitioner within the group can apply for group coordination. The court that has jurisdiction over insolvency proceedings against any of the companies in a group will decide on application. In the framework of this procedure, the coordinator proposes and implements a coordinated and comprehensive “package of measures” with the involvement of the participating insolvency practitioners. In the case of liquidation within the group, this concerted action serves to protect creditors’ interests and higher economic returns.
Source: Regulation 2015/848 of the European Parlament and of the Council on Insolvency Proceedings