SUMMARY: During the 2008 crisis in line with international trends, the Hungarian domestic legislator attempted to create a bankruptcy law, which supports the continued operation of viable companies. This resulted in the Act. LI. 2009. According to our research conducted in 2014 at the Hungarian Metropolitan Tribunal it can be concluded, that the changes in the regulation of bankruptcy in Hungary did not bring change in the efficient allocation of capital and as a consequence the creditor protection has not improved. The decisions of arrangement or liquidation were not built to the analyses of the companies’ past and future performance, and consequently the regulation failed to set a path of value creation in most of those companies that face financial difficulties.
KEYWORDS: effective default; regulation of bankruptcy; Hungary
JEL CODES: G32, G33, G34, K22