Hungary Bankruptcy Explained: What Foreign Companies Need to Know

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A Major Hungarian Company Filed for Bankruptcy Protection. Could Your Business Partner Be Next?

What the Bayer Construct case tells foreign companies about bankruptcy, liquidation and unpaid invoices in Hungary.

In August 2026, Bayer Construct Zrt., one of the major players in the Hungarian construction industry, together with one of the group's project companies, initiated bankruptcy proceedings.

Bayer Construct is not a small or unknown Hungarian business. The group has been involved in large construction and real estate development projects in Hungary for years, including major residential, office and other developments.

This is exactly why the case is relevant for companies doing business in Hungary. Even a large, well-known and long-established company can face a financial situation in which bankruptcy proceedings become necessary.

But this does not automatically mean that the company will cease to exist.

What does bankruptcy mean in Hungary?

Under Hungarian law, there is an important difference between bankruptcy proceedings (csődeljárás) and liquidation proceedings (felszámolási eljárás).

This distinction is particularly important for international businesses because English terms such as bankruptcy, insolvency and liquidation do not always correspond exactly to the Hungarian legal procedures.

The primary purpose of Hungarian bankruptcy proceedings is to restore the company's ability to pay its debts and allow it to continue operating – not to close the company.

Bankruptcy proceedings are initiated by the debtor itself. During the proceedings, the debtor receives a temporary payment moratorium, the court appoints an administrator (vagyonfelügyelő), and the company attempts to reach an agreement with its creditors.

Such an agreement may include extended payment terms, restructuring of debts, partial waiver of certain claims or other measures intended to restore or maintain the company's solvency.

As a general rule, the payment moratorium lasts until the beginning of the second working day following the 120th day after publication of the court order opening the bankruptcy proceedings. With the creditors' consent, it may be extended, but its total duration cannot exceed 365 days from the beginning of the bankruptcy proceedings.

In other words, a Hungarian company under bankruptcy proceedings still exists, and the purpose of the procedure may be precisely to allow it to continue its business.

Liquidation means something different

Hungarian liquidation proceedings have a different purpose.

They are aimed at terminating an insolvent company without a legal successor.

A liquidator assesses the company's financial position and outstanding liabilities, collects its receivables, sells its assets and distributes the available funds among creditors according to the statutory rules.

There is, however, an important connection between the two procedures. If the debtor and its creditors cannot reach a legally acceptable agreement during the bankruptcy proceedings, the court terminates the bankruptcy proceedings, establishes the debtor's insolvency and orders its liquidation.

Put simply: 

Bankruptcy proceedings: an attempt to reorganise the company's financial position and keep the business operating.

Liquidation proceedings: a procedure aimed at terminating an insolvent company.

What does this mean for creditors?

If your Hungarian business partner enters bankruptcy proceedings, this should no longer be treated as an ordinary payment delay.

Bankruptcy proceedings have specific legal consequences and strict deadlines.

For claims already existing when the bankruptcy proceedings begin, creditors generally have 30 days from publication of the court order to register their claims with both the debtor and the administrator, and the applicable registration fee must also be paid.

This can be particularly important for a foreign creditor. The fact that your Hungarian business partner is still operating, replying to emails, continuing projects or placing new orders does not mean that your legal position has remained unchanged.

At this point, simply waiting for the next promise of payment may no longer be a sensible option.

But risk management should start much earlier

The Bayer Construct case also illustrates a broader business point.

If your company delivers goods, performs work or provides services before receiving payment, your company is taking credit risk.

There is nothing unusual about this. Deferred payment is a normal part of commercial relationships.

The problem starts when invoices become overdue and the creditor continues to perform.

The first invoice becomes overdue.

A reminder is sent.

No payment arrives.

Another payment date is promised.

Meanwhile, more goods are delivered or more services are provided. A second invoice becomes overdue. Then a third.

The outstanding amount continues to grow while the creditor is effectively financing its own business partner.

This risk can be particularly easy to underestimate when the customer is a large and well-known company.

"It is a large company. They will pay."

Perhaps they will. But the size of a company, its revenue, assets, reputation or previous commercial success is not a payment guarantee.

Not every late payment means financial trouble

A payment being a few days late does not mean that your business partner is insolvent.

Repeated delays are different.

If promised payment dates are repeatedly missed while the outstanding amount continues to increase, it may be time to reconsider not only how the existing debt should be recovered, but also whether further goods or services should be provided before previous invoices have been paid.

Depending on the commercial relationship, this may mean reconsidering payment terms, requesting an advance payment or appropriate security, or reviewing the conditions under which further performance will be provided.

These questions should usually arise long before bankruptcy or liquidation proceedings begin. Debt management is not simply a matter of sending another payment reminder from time to time.

It is also about preventing a manageable outstanding invoice from becoming a significant commercial loss.

Even the largest companies carry risk

The Bayer Construct proceedings do not mean that foreign businesses should distrust large Hungarian companies.

The point is much simpler. The size of your business partner is not a substitute for proper risk management.

Payment deadlines, outstanding invoices and changes in a customer's payment behaviour should be monitored even in a long-established commercial relationship.

And when a previously reliable business partner repeatedly fails to pay, there comes a point when the creditor should decide how much further exposure it is prepared to accept.

Financial difficulties are not limited to small or unknown companies. They can happen to the largest ones too.

Before an unpaid invoice becomes a legal problem

Commercial relationships always involve a certain degree of risk. The important question is how that risk is managed when payments start to fall behind.

If you have an outstanding claim against a Hungarian company, or you are considering whether to continue supplying goods or services while previous invoices remain unpaid, it may be worth reviewing your legal and commercial position before your exposure becomes larger.

LilLaw advises international businesses on Hungarian commercial and corporate matters, including contractual risks, outstanding claims and insolvency proceedings.

Legal advice does not necessarily become valuable only after proceedings have started. Often, it is most useful while there is still room to make a business decision.