Hungarian insolvency law provides for a right of the liquidator to terminate, with immediate effect, contracts concluded by the debtor, or – in case neither of the parties rendered any services – to rescind the contract. This applies even in cases where contractual provisions or relevant legislation would otherwise prohibit the termination of the given contract. Any claim that is due to the other party as a result of the termination may be asserted within the liquidation process by notifying the liquidator within forty days from the date when the rescission or termination was communicated.

The right of the liquidator is so extensive that the liquidator does not even have an obligation to give a justification when exercising it. However, until recently, there was a long history of disagreement between Hungarian Courts on the question whether the creditors’ claims arising from such termination should be interpreted as costs of the liquidation process – ensuring a privileged position in the respective rights of the creditors – or as some other kind of claim depending on the circumstances. This question was finally resolved by the Supreme Court (“Curia”) a few years ago, when it established that such claims cannot be regarded as costs of the litigation process, thus denying them a privileged status among other claims against the debtor.

In its most recent decision on the issue, the Curia has once again reaffirmed the strength of the liquidator’s right to terminate the debtor’s contracts. The case in question revolved around the defendant’s argument that as the liquidator is obliged to act in the interest of the creditors, this right of termination shall also only be exercised in this manner. However, in its decision the Curia found that the liquidator’s right of termination is only dependent on the limitations expressly provided for in the relevant legal provisions, and unless otherwise stated by law its effects on the interests of the creditors are not to be taken into account when judging its lawfulness.

Although controversial, the decision confirms the liquidator’s role in the liquidation procedure as the person responsible for the closing down of the debtor’s business relations, even in the face of contradicting certain creditors’ interests.