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UPDATE - Govt declares Malev 'strategic company' in decree

The government on Monday declared national carrier Malev a "business of prime strategic significance".

The government made the declaration in a decree dated January 30 as mandated by a paragraph in the Act on Bankruptcy and Liquidation Procedures. The decree came into force at 7am on Monday.

In the Act on Bankruptcy and Liquidation Procedures, a government declaration of a company’s "strategic significance" prevents any creditor of the company from initiating a bankruptcy procedure against it.

The decree cites paragraphs in the act which authorise the government to make the declaration of troubled companies at which the settlement of debts, agreement with creditors or reorganisation is in the national economic interest.

The declaration may be made of companies of "national significance" whose losses cannot be eliminated "in the foreseeable future because of a shortage of assets" and in which neither the owners nor the state may offer support, but whose possible sale as a whole entity is in the public interest in light of its continued operation thereafter.

The declaration allows companies for who insolvency is the only option to be wound up without a legal successor in an accelerated, transparent procedure.