There is a special form of trust which can be used for corporate reorganisation, when the debtor is insolvent in an economic sense, but his business can be recovered by means of getting a new loan, ensuring repayment of the debts accrued before. Since the new creditor takes a much greater risk, it makes sense for him to grant a loan only if the debtor gets into a better position to fulfill his new obligation. Although the Hungarian bankruptcy law – for now – does not make it possible, a well structured trust deed can be a solution for this problem. The debtor gets the new loan linked to a specific purpose as an asset manager on the basis of the trust deed, thus the loan and the purchases financed by it will get into the ownership of the trustee rather than the debtor, which ensures a better position for the creditor, who takes a greater risk, as the beneficiary of the trust in a liquidation procedure.
You are here: / Reorganisation