The regulations on epidemiological preparedness that came into force after the end of the state of emergency retained the amendments to the legislation on initiating insolvency proceedings aiming to help companies in difficult financial situation. In our article, we examine what changes the amendment has brought to the conditions for initiating insolvency proceedings and what options are available to a company if it wishes to enforce its overdue claims.
The new law stipulates that in case of an undisputed or acknowledged debt based on a contract which has been due for at least 20 days, the insolvency proceeding may not be initiated for another 75 days after the expiry of the deadline specified in the demand for payment. In this case, the court may set the debtor 15 days to pay the debt instead of the 45-day period set in the Bankruptcy Act. According to the original rule of the Bankruptcy Act, an insolvency proceeding may be initiated in case of a capital claim exceeding HUF 200,000. Contrary to this rule, until 31st December, an insolvency application may be filed against the debtor only if the amount of the claim, including interest and contributions, exceeds HUF 400,000.
But what to do if the amount of the debt is lower than the amount specified in the law? In this case, the creditor has the opportunity to submit an application for the issuance of a payment order (fizetési meghagyás, fmh) to recover the debt.
In case of a smaller amount of debt, initiating an order for payment procedure is more beneficial for the creditor because it is faster and more cost-effective than initiating insolvency proceedings. The process fee of a payment order is 3% of the amount claimed, but at least HUF 8,000, while the court fee of an insolvency proceeding is HUF 80,000. If the debtor does not file an objection within the time limit and thus the payment order issued by the notary becomes final, enforcement proceedings may be initiated and, if the debtor has executable assets, the debt may be recovered. Whereas, in case an insolvency proceeding has been launched, all other creditors may seek satisfaction from the assets of the debtor and the fee of the insolvency trustee (eventually several hundreds of thousand Forints) must be also paid. However, there is no doubt that the prospect of insolvency proceedings may put great pressure on the debtor who intends to continue its operations.