The European insolvency landscape is undergoing a period of intense transformation, driven by EU-level legislative initiatives and national responses to disruptions – most notably the COVID-19 pandemic and the war in Ukraine.
This article was originally published in Issue 12.8 of the CEE Legal Matters Magazine.
The first milestone of this shift is Directive (EU) 2019/1023 on preventive restructuring frameworks, which requires Member States to provide financially distressed companies with access to restructuring tools that enable continued operations during negotiations with creditors. As of mid-2025, most Member States have implemented the directive, though the scope and ambition of national transpositions vary significantly. Countries such as Germany and the Netherlands have adopted comprehensive regimes (StaRUG, WHOA). Hungary was among the early adopters, introducing restructuring proceedings accessible to all domestic companies (Szat.).
In response to the pandemic and geopolitical tensions, governments across Europe enacted temporary measures – such as suspensions of insolvency filings, moratoria on creditor actions, and extensions of procedural deadlines – to prevent mass bankruptcies of otherwise viable businesses. Hungary followed this approach by implementing special laws that provided temporary relief from enforcement actions and extended procedural timelines.
Market forecasts indicate a continued rise in corporate restructuring activity across Europe in the second half of 2025. However, the pace and volume of cases are likely to vary across sectors and regions in the EU, reflecting differences in industrial specialization, levels of global integration, and stages of economic development.
Hungarian Developments
The Hungarian Government has taken a strategic step with Government Decision 1824/2024. (IX. 19.), officially launching the development of a new insolvency framework aimed at modernization and alignment with EU standards and market expectations. The draft legislation is currently in progress and is expected to introduce, inter alia, a new concept of consolidated insolvency regime (including both reorganisation- and liquidation-type proceedings), new restructuring tools for viable businesses, going-concern sale mechanisms, enhanced responsibilities for managers and shareholders.
In recent years, Hungary has also implemented temporary insolvency measures to address economic challenges. These included innovative regimes (for example, Gov. Decree 129/2023. (IV. 17.)) allowing court-appointed liquidators to transfer valuable business units and assets into newly established entities, which could then be sold via competitive bidding, while preserving the “good” parts of the business and maximizing creditor recovery.
Most recently, the Hungarian government has also adopted a temporary special law (Gov. Decree 252/2025. (VIII. 7.)) with regard to a unique situation, reintroducing the reorganization procedure originally launched during the COVID-19 crisis (and available until the end of 2024). Generally, it allows for a confidential procedure in special cases to avoid reputational damage, allowing the companies to be sold as going concerns, potentially with interim financing similar to the EU’s planned pre-pack mechanism, with the appointment of the state liquidator as administrator. Importantly, this procedure is only available in exceptional cases, requiring the government to designate the company as strategically important.
These developments reflect an emerging trend in Hungary, where lawmakers increasingly recognize the value of early-stage restructuring tools for preserving viable or strategic businesses. It is anticipated that the forthcoming insolvency legislation will introduce permanent mechanisms to support such objectives.
EU Level Developments
On December 7, 2022, the European Commission published a proposal (COM (2022) 702 final) for a directive aimed at harmonising targeted aspects of insolvency law across the EU. This initiative is part of the broader Capital Markets Union strategy and seeks to address fragmentation in national insolvency regimes that hinder cross-border investment and reduce recovery rates. The directive focuses on minimum harmonization of core insolvency procedures, rather than pre-insolvency or discharge mechanisms. Once adopted, Hungary will be required to transpose the directive, likely necessitating amendments to its insolvency code, particularly in areas such as directors’ duties to file, avoidance actions, and procedural rules.
Additionally, the 28th regime concept is in development as well. It is a theoretical model for optional EU-wide legal frameworks that could offer a uniform, opt-in insolvency regime for cross-border businesses, reducing compliance costs and legal uncertainty. If implemented, Hungarian companies would be able to benefit from this regime.
Finally, the Recast European Insolvency Regulation (Regulation 2015/848) is scheduled for review in 2027. While Hungary has implemented the regulation, challenges remain, especially in applying group coordination mechanisms, ensuring procedural efficiency in cross-border cases, and improving transparency and asset tracing.
Authors: Márk Seres, Zoltán Fabók
Márk Seres*
Restructuring Service Stream Leader
Márk Seres
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