In cross-border insolvency matters, EU regulation has long focused on procedural issues, leaving substantive rules largely to the member states. As a result, creditors in cross-border deals have had to navigate up to 27 different insolvency regimes. This fragmentation has led to legal uncertainty and higher transaction costs, discouraging cross-border investment. The alignment of Hungarian insolvency rules with EU standards is therefore key to improving the transparency and competitiveness of its investment environment.
The directive introduces changes in several key areas, including:
Avoidance Actions: Establishing minimum rules for challenging transactions detrimental to the general body of creditors, including timing and substantive conditions.
Tracing of Assets: Enhancing access for courts, authorities and insolvency practitioners to relevant databases and registers to improve asset tracing.
Pre-pack Proceedings: Introducing structured pre-pack proceedings aimed at the sale of a business as a going concern.
Directors’ Duties: Strengthening responsibilities in situations of financial distress and requiring timely action.
Hungarian law already provides a developed system of avoidance actions. Hence, the directive introduces minimum standards rather than entirely new concepts regarding categories, look-back periods and a maximum limitation period of three years from the opening of proceedings. The three main categories are 1) preferential transactions (three-month look-back period); 2) transactions for no or manifestly inadequate consideration (12-month look-back period); and 3) acts intentionally detrimental to creditors (two-year look-back period).
While these concepts are familiar in Hungary, the main challenge will be integrating these minimum requirements into an already established domestic framework while preserving the existing balance between creditor and debtor interests.
One of the most innovative elements of the directive is the introduction of pre-pack proceedings, which allow the preparation of a sale before the formal opening of insolvency, followed by swift execution. While aimed at preserving going-concern value, the process is subject to strict requirements on transparency, competition and independent supervision.
Hungarian law does not currently provide a structured pre-pack framework. It therefore remains uncertain to what extent the necessary institutional and market conditions are present. The integration of pre-pack proceedings into the Hungarian system also raises questions regarding judicial control, the role of the insolvency practitioner, limited creditor rights, and the existing rules governing asset sales.
The directive also places significant emphasis on digitalization, requiring member states to ensure more effective access for courts, authorities and insolvency practitioners to central registers, including bank account registers and asset databases. This may enhance the efficiency of asset tracing and reduce information asymmetry between debtors and insolvency practitioners. Still, its practical impact will depend on system integration, data quality and institutional capacity.
The directive clearly aims to foster a more harmonized and “Europeanized” insolvency environment, with greater emphasis on value preservation and procedural efficiency. From the perspective of creditors, the changes may enhance predictability and legal certainty in cross-border situations. These benefits, however, are not automatic: their realization will depend on the consistent application of the rules and on the market’s ability to adapt to the new framework.
This article was first published in the Budapest Business Journal print issue of June 5, 2026.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
