Liquidation - The liquidation process in Hungary

How can a foreign company come into liquidation in Hungary?

  • Many people neglect their company and careless attitude put them into liquidation process,
  • Due to unpaid bills, the suppliers initiate this procedure for other companies or
  • Due to the accumulated tax debts or other liabilities, the members initiate themselves the liquidation.

If you do not care about the liquidation process and you leave the company alone, after short time it will revenge itself:

Of liquidation, the liquidator can not afford to treat the former managing director of the company in generous way. They have to meet legal obligations in order to that there are a lot of the criminal complaints at the liquidation proceedings. We recommend that once you think of the liquidation for any reason; please contact us immediately, preferably before you hand over any documents to the liquidator.

There are two ways of winding-up proceedings you can relate to. If your company's bill is not paid by a Hungarian company, liquidation procedure may be initiated against the company by you. In Hungary, this can only be with lawyer cooperation where a high chance is for success. Your partners probably pay you the debt as they intent to save their company.

However, the real problem arises when the liquidation process starts against your business, which causes a lot of difficulties for both the company and you. We would like to draw your attention that the sale of the company or the appointment of a new managing director will not release the criminal liability connected to the problems caused during the business activity with the former manager.

Below we analyze the problem, if the business was on the verge of liquidation, and the company started or is in the process of liquidation.

In connection with liquidation, advice or legal representation, you can write us to the below email address:

info [wnW5DKrg] drszeiler.hu or call us on the following number 0036/70/676/59/89.

PROBLEMS IN THE LIQUIDATION PROCEDURE

CASH DEFICIT AND MISSING ASSETS

Perhaps one of the most common problems is on liquidation that many company have just money in the cashier officially, not physically and the assets are only registered but do not exist. Due to which the directors don’t pass the liquidator of the balance-sheet activities and documents. At the beginning of the liquidation, the liquidator must be given the company’s money shown at the closing balance; otherwise he or she can make a criminal complaint for embezzlement. Since the company's money has been spent by the executive something else and they are not able to reckon with it. The problem is the same with the devices, but in many cases they are amortized to 0. Of course, the liquidator has the right to see for what the company spent the company's money prior to the liquidation. Further, he or she is possible to challenge the law in court within one year contracts concluded. The amount in the cash register should not be indicated as a loan for a firm’s member or the owner. As in the liquidation process, the liquidator will demand it from that person. 

The disappearance of documents

At the beginning of the liquidation process people often eliminate the papers or don’t give the documents to the liquidator. Unfortunately too many people advise it. Our law firm in no way suggests you to eliminate the documents. At the beginning of the liquidation, we are reviewing the documents for the liquidator and focus on the problem solving if it turns up.

COMPANY SALE AS A METHOD FOR LIQUIDATION SOLVING

Many people do not take the risk and hassle of liquidation, so the companies are often sold to foreigners or persons who can not be found. With this action you immediately admit that there is a problem with the company. Executives are responsible for the company’s mistakes in the same way, which were made in the performance of their ownership. Therefore we do not recommend the sale of the company as liquidation method.

TAX AUDIT IN LIQUIDATION

The tax authority must carry out a tax audit, if a company is under the termination process (final settlement, liquidation). This comes easily to establish substantial tax deficiency. The more significant problem is that the liquidator with no interest will represent the company before the tax authority. The problem will not be the amount of the tax deficiency, more likely the reason of the tax deficit in the tax inspection decision will cause the trouble. This is the result of a tax audit, and due to that you can easily face to a criminal complaint before the liquidation period. If you have a good cooperation with the liquidator, the representation can be properly during the final tax audit as well.

THE LIQUIDATOR DECIDES ON THE COMPANY

Be aware that after the final decision of liquidation you are not able to dispose of the company. The liquidator shall decide on everything after the final decision on liquidation. The liquidator decides on the bank account, pays the wages, complies with the returns, signs contracts, represents the company etc. After the final liquidation order, if you carry out any business activities on behalf of the company, it is considered as a crime! If the company continues to operate during the liquidation process, you should contact the liquidator company immediately with notice of the winding-up process.

WHAT TO DO

If you're thinking of initiating the liquidation procedure or the company is not far from the liquidation ordering, please contact us prior judicial decision. After the declaration of liquidation order you are unable to do anything (control, to make contracts etc.) on behalf of the company.

At the beginning of the liquidation process the final balance should be prepared, which has to be transferred to the liquidator. You should pass to him/her on the company's total assets (cash, assets). Any question arises, you have to inform the liquidator, and you must work together. The business transactions should be defended by you, which were made before liquidation. If all creditors in the liquidation were paid, the liquidation will end with final settlement. In that case the remaining assets belong to the members.

CRIMINAL PENALTIES DURING THE LIQUIDATION

Due to not given documents to Authority, lack of cash or assets, source from tax audit, bogus contracts, withdrawal of funds, the following criminal consequences can be expected:

- Tax fraud (fraud in budget)

- Bankruptcy crime

- Embezzlement

If you need representation or advice on liquidation, we are delighted to receive your inquiry.