BDO: Restructuring of struggling businesses is more effective

By: Trademagazin Date: 2024. 04. 29. 10:19

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Viable businesses but struggling with payment difficulties have been able to start a restructuring procedure in Hungary for almost two years now, since July 2022, however, despite the fact that, according to experience so far, this is in most cases the most advantageous tool for both the businesses and their creditors, for the time being the professional there is also a lot of uncertainty regarding the possibility in circles. This is sufficiently illustrated by the fact that only one public restructuring procedure has been initiated in Hungary since the law entered into force. BDO Legal summarizes below the advantages of the restructuring process compared to previous reorganization options.

Although KSH’s data in the recent period show favorable changes in the state of the economy in many respects, reaching a stable growth path is expected to take time, which may cause payment problems for many businesses in the coming months as well. For companies that need economic, organizational, and financial restructuring due to current or foreseeable payment difficulties, the restructuring process can clearly be the optimal tool for rescheduling their claims and negotiating with their creditors.

Today, there are three non-litigation procedures in Hungary that provide a solution for corporate reorganization: the bankruptcy procedure, the reorganization procedure, and the restructuring procedure available from July 2022. When comparing these three tools, several important advantages can be identified in favor of the latter.