The Effect of the Socialist Rearrangement on the Hungarian Insolvency Law

With regard to insolvency cases in Hungary, the Interwar period was dominated by the bankruptcy procedure and the compulsory non-bankruptcy settlement procedure. The Second World War generated big changes in the field of economic law, because the formation of the socialist relations in the economy pushed the economic legal rules into the background. But this was not true for the insolvency law, since the state had an active law-making activity in this field in the interest of the socialist rearrangement. My paper examined this change on the level of the legal rules, in the practice and in the Hungarian jurisprudence, because my aim was to give a complete picture about the insolvency law in Hungary in the years of the socialist rearrangement. My research initially was to focus on looking up the judicial documents concerning the Hungarian insolvency practice between 1948 and 1951, but this attempt was unsuccessful because of the lack of such documents. For this reason, I turned my attention to the official gazettes as the only means of establishing the number of insolvency cases. According to the results of this analysis, it was determined that bankruptcy procedures and compulsory non-bankruptcy procedures disappeared from 1949 onwards from the Hungarian judicial procedure, and they were replaced by the liquidation ruled by Government Decree No. 560/1949. This liquidation was an administrative procedure, since it was the Centre of Financial Institutions that carried out the compulsory liquidation. In this era, the private autonomy was ceased in the insolvency law, and the state dominated these processes, and the insolvency law became as a liquidation process the instrument of nationalisation.