Felszámol

Felszámol is a Hungarian verb meaning to liquidate or wind up a company or other legal entity. In a legal context, felszámolási eljárás is the formal process of realizing the debtor’s assets to satisfy creditors and dissolve the entity. The aim is to convert the estate into available funds and distribute them to creditors according to a defined priority, after which the legal entity is dissolved.

Etymology: The term derives from fel- (up, out) and számol (to count), referring to the final settlement of accounts. The noun felszámolás denotes the act of liquidation.

Procedure: The court may initiate the procedure upon application by the debtor or a creditor. A liquidator (felszámoló) is appointed to take control of the debtor’s assets, settle claims, and manage the sale of property. The liquidator prepares an inventory, converts assets to cash, pays costs, and distributes funds to creditors according to statutory priority. The debtor’s management typically loses control of the business during the process, and ongoing operations, if any, are conducted under the liquidator’s supervision.

Relation to other insolvency procedures: If the goal is to restructure the business rather than liquidate it, other procedures such as debt settlement or restructuring proceedings may be pursued. Felszámolás is generally chosen when the debtor’s assets are insufficient to satisfy debts or when a viable reorganization is not feasible.

Outcomes: Upon completion, the assets are exhausted and the company is dissolved. Remaining legal matters related to the insolvent entity are closed, and the company ceases to exist as a legal person.