Home / All CMS Expert Guides / CMS Expert Guide to stabilisation and restructuring... /
Hungary

Stabilisation and restructuring law in Hungary

Table of contents
  1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?
  2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?
  3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?
  4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?
  5. Which prerequisites are necessary to qualify for a programme?
  6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?
  7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?
  8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?
  9. How are insolvency application deadlines handled in times of Corona?
  10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?
  11. Are there any particular Corona-related rules on cross-border insolvencies and restructurings in place in your country?
  12. Which restructuring/insolvency measures instead of a wind down are available for Corona-related restructurings of entities with an international design or background in your country?
Hungary

1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?

The Hungarian government released a decree on 19 March 2020 which focus on the most affected economic sectors, such as tourism, hospitality, entertainment, performing arts, sports, gambling, film and events management services. 

The economic package includes grace periods until 31 December 2020 on all capital repayment, interest payment and fee payment obligations for corporate and residential loans, and financial leasing agreements, the maximisation of the annual percentage rate (APR) for new non-secured consumer loans and that during the period between 1 March 2020 and 30 June 2020, lease agreements may not be terminated and rents may not be increased for tenants operating in the sectors listed above. All payment obligations for loans already disbursed will be restructured. 

The aim is to provide relief for corporate borrowers in order to preserve their businesses and avoid unnecessary defaults as a direct consequence to the suspension of their business activity due to the coronavirus outbreak. Grace periods will also apply to residential borrowers. Lenders will also benefit from these measures in an indirect manner, given non-performing loans have a higher capital requirement compared to performing loans under the Capital Requirements Regulation No. 575/2013. Borrowers, however, may opt to fulfil their capital repayment and interest payment obligations according to the original terms of the loan or leasing agreement. Terms of the security agreements regarding the borrower’s obligations will also be extended in accordance with the prolonged loan agreements.

The APR on new consumer loans signed on and after 19 March 2020 will be capped at the rate equal to the base rate published by the Hungarian National Bank (MNB) and increased by 5%.

Note that the government added that the above are only the first steps which will be followed by further temporary state aid regulations.

2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?

None announced yet.

3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?

Guarantees, loans and equity injections are also available to use for rescue as long as they are in compliance with the Temporary Framework adopted by the European Commission on 19 March 2020, based on Article 107(3)(b) TFEU, to enable Member States to use the full flexibility allowed under State aid rules to support their economies during the COVID-19 pandemic.

4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?

No.

Comments

None announced yet.

5. Which prerequisites are necessary to qualify for a programme?

See above.

6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?

No.

Comments

Stabilisation measures are available for those entities in the above economic sectors most hit by the Coronavirus outbreak. However, no entity owned by the State or any local government or which relates to the MNB can benefit from these measures.

7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?

Yes.

Please specify.

Subsidiaries and branches of foreign mother/holding companies are eligible to apply for these measures, irrespective of whether or not they are incorporated in any of the EU Member States.

8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?

No.

Comments

No, except that the MNB sent a notice to the banks operating in Hungary not to pay dividends until 30 September 2020.

9. How are insolvency application deadlines handled in times of Corona?

No change has been introduced.

10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?

No.

No.

No special measures have been introduced apart from the above mentioned payment moratorium which may make restructuring possible. Bankruptcy (reorganisation type court insolvency procedure) and out-of-court restructuring measures (e.g. enforcement standstill and rescheduling payments) which companies usually can use are available unchanged.

Authors

Show more Show less
Portrait ofErika Papp
Erika Papp
Managing Partner
Budapest