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Hungary forced liquidations hit all-time high in June

Compulsory liquidations in Hungary rose to an all-time high in June, reports, citing business data registry Opten.

Some 9,500 businesses have been forced into liquidation in the first six months of this year, the highest ever semi-annual figure, and the numbers are still rising, Opten said.

Meanwhile, the number of voluntary liquidation surged 65% to nearly 12,000 in January-June compared to the same period in 2010. In June alone, over 2,100 companies were put into liquidation by creditors.

The steep rise in the number of voluntary liquidations is down mainly to recently enforced regulations aimed to crack down on companies that fail to file their balance sheets with the authorities on time, Opten said, adding that over 100,000 companies out of the 560,000 active in Hungary could eventually go out of business that way.

Opten strategic director Hajnalka Csorba said similar stringency is needed to stamp down on company owner who liquidate their businesses and shortly after set up another one in an attempt to escape payment.

According to statistics, more than half of the owners of wound-up companies start a new and mostly similar business shortly after liquidating their insolvent businesses. Nearly 25,000 new businesses were registered in the first half of this year, which points to that tendency, Csorba said.

Some individuals are probably making a comfortable living out of buying businesses on the verge of collapse and then liquidating them. Opten's list is topped by one József Erdélyi, who has been owner – at least on paper – of no less than 286 liquidated companies.

The number of forced and voluntary liquidations is likely to hit 19,000 and 25,000 respectively this year, Csorba said.