Part I — Situation overview

A government decree published in the Hungarian Official Gazette on the afternoon of Friday 4 September 2026 and entering into force at seven in the evening classified the bankruptcy proceedings of Bayer Construct Zrt. and ZVK Development Kft. as being of strategically prioritised importance. According to the reasons given for the decree, the government, weighing industrial policy and economic considerations, found that settling the debts of the economic operators concerned and reaching agreement with their creditors is a matter of prioritised economic policy interest. Following the decision, the court appoints the wholly state-owned Nemzeti Reorganizációs Nonprofit Kft. as asset supervisor: the asset supervisor may inspect the companies’ books, examine their contracts and their payment accounts, and the companies may not take on new financial obligations without his approval. He may challenge transactions concluded without permission, may initiate the reclaiming of payments that breach the rules of bankruptcy protection, and if he detects the suspicion of earlier asset stripping, he is obliged to inform the court and the competent authorities. In the statement accompanying his announcement, the Prime Minister put the direct and indirect exposure of the Hungarian Development Bank to the corporate group — loans, bonds and state guarantees together — at around 207 billion forints, and warned the owner that stripping assets from an economic organisation in a situation threatening insolvency is a bankruptcy offence.

The antecedents were compressed into a few weeks. In August 2026 the government, citing breach of contract, withdrew from the agreement under which the state would have purchased the office complex built behind Bosnyák Square in Zugló from a project company linked to the corporate group; according to press reports the amount paid up to then exceeded 300 billion forints, and the state is reclaiming it with interest. The government’s main argument was that the closing conditions had not been fully met — among other things because the Zugló local government had a right of pre-emption over the properties. The company, by contrast, claims that the buildings were completed on time and received their occupancy permits. Bayer Construct applied for the opening of bankruptcy proceedings on 26 August, and the court granted a temporary moratorium on payments a day later; the project company likewise sought bankruptcy protection the following day. On 3 September the Zugló council announced that it was bringing an action against the corporate group over its own claim of more than ten billion forints. The two bankruptcy law experts consulted by Portfolio assessed the legal background of the case as follows: the strategically prioritised procedure has been part of Hungarian bankruptcy law since 2011, and the text of the norm “provides the government with a fairly wide room for manoeuvre” — that is, its application is in itself lawful, but does not follow automatically from the nature of the case.

MIAK’s reading: the government chose an instrument that fits the situation, but did not make good the most important omission. The state is one of the largest creditors in a bankruptcy in which the risk of asset stripping is real; in such a situation obtaining oversight powers is a defensive step, not a gesture of power. The problem lies in the structure of the instrument: the category of “economic organisation of strategically prioritised importance” is discretionary — the government decides on it, without pre-established criteria and without an obligation to give public reasons. The same category has been applied on several occasions in recent years, and MIAK objected then too that the conditions of application cannot be ascertained from outside. If the list of beneficiaries now changes but the rule of selection does not, then the system remains unchanged, it merely operates in a different direction. This is the yardstick MIAK applies consistently: what matters is not who exercises the discretionary power, but whether there is a rule attached to it.

Part II — Foundations in the literature

The interpretive frame is given by three sources. János Kornai (Hungarian-born economist, who developed the theory of the soft budget constraint; Harvard professor between 1986 and 2002) describes in Economics of Shortage the mechanism whereby, if a company can count on an external — typically state — source covering its losses in difficulty, solvency ceases to be a real constraint on behaviour. The company’s decisions are then no longer disciplined by its own revenue. The Return of Depression Economics by Paul Krugman (American economist, Nobel memorial prize laureate in economics, researcher of international trade and of crises) describes the same phenomenon with the concept of moral hazard: if one party decides on the risk-taking but another bears the loss, then risk-taking will systematically be excessive — and the author identifies state-backed lending as the most frequent breeding ground of this pattern. And Why Nations Fail by Daron Acemoglu and James A. Robinson (economists, leading authors of institutional economics; awarded the Nobel memorial prize in economics in 2024) provides the frame in which it can be judged when discretionary state intervention becomes dangerous: for them inclusive institutions turn extractive when a narrow elite appropriates economic opportunities and political power at the same time. The three sources together lead to the same place: judging the present intervention depends not on whether it is lawful, but on whether it is tied to a rule. The detailed treatment of the literature — author by author, with quotations — can be found in section 6.4 Literature in detail.

📖 Source: János Kornai: Economics of Shortage; Paul Krugman: The Return of Depression Economics; Daron Acemoglu – James A. Robinson: Why Nations Fail

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The starting point is that the classification is defensible in the present case: alongside state exposure of several hundred billion forints and a bankruptcy petition strikingly well timed, obtaining oversight powers is a proportionate response. The proposals therefore do not argue against the decision, but for the regulation of the instrument.

3.1 Public classification criteria and mandatory reasons for strategically prioritised procedures (within 90 days)

The government should lay down in a decree what elements of the facts must be present for it to classify a bankruptcy or liquidation procedure as strategically prioritised, and should publish reasons of at most two pages for every such decision. The statement of reasons should contain four items of data as a matter of obligation: the amount of state exposure to the corporate group concerned, broken down by legal title (loan, bond, guarantee, prepayment), the value of live state contracts, the number of employees and registered subcontractors concerned, and the order of magnitude of non-state creditor claims. Together, the criteria and the reasons make it verifiable that the classification depends on the objective features of the situation, not on the identity of the party concerned. This is a joint concretisation of MIAK’s programme points G6 (Programme against rent-seeking and regulatory capture) and A1 (Public money dashboard).

3.2 An exit condition and a twelve-month ex post impact assessment (from the closing of the composition with creditors)

Every strategically prioritised classification should come with a pre-established condition of termination: the classification lapses when the composition with creditors becomes final, or at the latest on the expiry of a specified period, unless the government takes a new, reasoned decision. Within twelve months of the closing of the classification, a public ex post impact assessment should be prepared on how much of the state’s claim was recovered, how many jobs and subcontractor claims survived, and how much the procedure cost. This is needed because the characteristic risk of discretionary instruments is not their introduction but their becoming stuck: if there is no point of termination, the special procedure gradually becomes the norm. The proposal is the direct application of programme point G20 (Economic policy impact assessment system) to this group of instruments, and it also fits the logic of I3 (Legislative impact assessment).

3.3 Creditor protection and state claim management instead of nationalisation (throughout the bankruptcy proceedings)

It has been raised in public debate that the state should take over the corporate group. MIAK does not propose this. Kornai’s argument (see 6.4.1) is directly applicable here: taking a company into state ownership takes over not only the assets but also the losses and future obligations, while market discipline is replaced by administrative assessment — that is, it creates precisely the soft budget constraint whose elimination ought to be the aim of reform. Instead MIAK proposes that the state act as a creditor: that it enforce its claims in the composition with creditors, initiate the challenging of transactions suggesting asset stripping, and manage the Hungarian Development Bank’s exposure separately, with a public reporting obligation. For settling the claims of subcontractors and home buyers, a separate, pre-announced order of satisfaction should be drawn up — this is the point at which the intervention genuinely serves the public interest, because it affects several thousand actors, each of them small and legally in a weak position. The proposal is connected to programme points I5 (Protection of property rights) and G5 (Competition policy and anti-monopoly).

The three proposals are bound together by a single principle: a discretionary instrument is legitimate if a rule, reasons and an expiry date belong to it. Without these, the application of the category always leaves the same question open — why this company and why now — regardless of which government uses it. Acemoglu and Robinson’s institutional frame (see 6.4.3) makes precisely this continuity visible: institutional quality depends not on the decision-maker’s intentions but on how the decision is regulated.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Public assets The asset supervisor’s right of inspection substantially reduces the chance of asset stripping; the prospect of recovering the 207 billion forint exposure improves If the classification remains without criteria, future applications become impossible to judge, and the present precedent may also backfire
Business confidence A public set of criteria makes it predictable when a company can expect state intervention Without criteria, intervention becomes built into the planning of large domestic companies as a political risk, which worsens the propensity to invest
Construction and employment An ordered ranking of subcontractor and home buyer claims protects several thousand actors A drawn-out procedure may cause chains of subcontractor failures; during the payment moratorium suppliers’ liquidity deteriorates
Budget Acting as a creditor is cheaper than taking over: there is no obligation to inject capital and to operate If nationalisation nevertheless takes place under political pressure, both the loss and the future obligation land in the public finances

The main question for consideration is time. Appointing an asset supervisor gives immediate protection, while settling the regulation takes months — and the order of the two is the reverse of what would be desirable. This is not in itself a fault: in a running bankruptcy, defence cannot wait for legislation. It becomes a risk if the legislation is then omitted, because the urgent intervention has taken place and the pressure has ceased. That is why the proposal ties the set of criteria to a concrete, ninety-day deadline. The second point for consideration is the extent of publicity: disclosing state exposure by legal title may be commercially sensitive data during ongoing settlement negotiations. In MIAK’s view the aggregated breakdown by legal title can be communicated without damaging the negotiating position — while itemisation contract by contract can indeed wait until the procedure is closed.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

The performance indicators (KPIs) below are proposals, not government decisions — MIAK considers them suitable for judging, in 12 and 24 months’ time, what the intervention has produced:

  • The recovery rate of the state’s claim: the ratio of the state claim recognised in the composition with creditors to the amount actually recovered. This is the most important number, from which it will emerge whether the intervention was worth it.
  • The settlement rate of subcontractor claims: what percentage of registered subcontractor claims were satisfied when the composition was closed.
  • The rate of reasoned classification decisions: what percentage of strategically prioritised classifications issued from 2027 onwards were accompanied by public, data-backed reasons. Suggested target: 100 per cent.
  • The average duration of classifications: for how many months a strategically prioritised classification remains in force from promulgation to termination. The indicator signals the risk of becoming stuck.

5.2 Summary

MIAK’s request can be summed up in a single sentence: within ninety days the government should write down under what conditions it classifies a bankruptcy procedure as strategically prioritised, and when that classification ends. The present decision can be justified, but the category is without a rule — and what is without a rule can next time be applied to another situation, with other arguments. MIAK does not support the suggestion of nationalisation: acting as a creditor is cheaper and faster, and it also maintains market discipline.

Two MIAK foundational values are in play here. Ideological neutrality, because the yardstick does not depend on who is affected by the intervention: the same absence of criteria is objectionable now as in the similar classifications of recent years — and it is precisely the fact that MIAK said the same before that makes the present point credible. And accountability, because without public reasons and an expiry point nobody can be held responsible after the fact for a discretionary decision: there is nothing against which to measure whether it was a good decision.

Part VI — Reasoning and further sources

6.1 The framing of the press by spectrum

The liberal-left and public affairs band read the decision within the frame of settling accounts with the business circles of the former government. Telex put the Prime Minister’s message published on social media above the headline, and set out the asset supervisor’s powers in detail — that is, the paper also paid attention to the institutional substance, not only to the political frame. 444.hu supplemented the same thread with the company owner’s letter to employees, in which he justified the bankruptcy petition by several developments involving significant financial exposure, and recalled its own earlier information that several office building purchase contracts had been concluded in the months before the election. HVG gave the strongest analytical framing: it recalled that the government had also announced a general review of the priority investment statuses awarded by the former cabinet, and pointed out that the new government also has something to lose in the case — the fate of the more than 300 billion forints being reclaimed is not self-evident. 24.hu and ATV reported the facts of the announcement, supplemented with the Zugló legal action.

The economic band provided the most detailed professional background. Portfolio carried two separate pieces: one reconstructed the content of the government decree and the antecedents of the Bosnyák Square affair, the other consulted two bankruptcy law experts even before the decision. The latter contains two findings that are indispensable for judging the decision: first, that the strategically prioritised procedure does not mean automatic nationalisation and does not in itself eliminate the state’s creditor risks, and second, that the legal status of a state liquidator is the same as that of market liquidators, and the entity exercising state ownership rights cannot instruct him during the procedure either. These two points are regularly lost in public debate.

The conservative band was more restrained in its daily treatment of the topic: Magyar Nemzet and Mandiner focused that day primarily on the media affairs and on the extension of the migration crisis situation, and did not deal with the bankruptcy in a separate analysis. That in itself is information: this band did not that day seek the rule-of-law reading of the government intervention, even though the criticism of discretionary classification — which MIAK formulates here — can equally well be grounded from a conservative legal outlook. According to the monitor’s source marking, Népszava’s piece was available only at headline level, without a specific article URL (headline-level reference only).

6.2 Facts and data

Data Value Level of proof
Publication and entry into force of the government decree 4 September 2026, 19:00 official gazette (Magyar Közlöny)
Petition for the opening of bankruptcy proceedings 26 August 2026 court procedural fact, concurring reports in several papers
Temporary moratorium on payments 27 August 2026 court decision, concurring reports in several papers
Appointed asset supervisor Nemzeti Reorganizációs Nonprofit Kft. (wholly state-owned) government decree
The Hungarian Development Bank’s exposure to the corporate group around 207 billion forints (loan, bond and state guarantee together) prime ministerial communication, without independent verification
Amount paid for the Zugló office complex over 300 billion forints (one source mentions 315 billion forints) press report, precision differs between papers
The Zugló local government’s claim over 10 billion forints council announcement
Introduction of the legal institution of the strategically prioritised procedure 2011 bankruptcy law in force

Two notes on the data. First, the papers do not give the same figure for the amount paid at Bosnyák Square: some reports write “more than 300 billion forints”, while Portfolio writes specifically “around 315 billion forints”. The blog therefore indicates an order of magnitude, not a precise value. Second — and this is the more important — the 207 billion forint state exposure is a prime ministerial communication, which no independent source has so far confirmed, and whose breakdown by legal title is unknown. This is precisely one of the practical reasons for proposal 3.1: for an item of this size the public needs not a communication but a verifiable statement.

6.3 Policy dimensions

  • Economy (programme points) — discretionary state intervention as a competition policy and rent-seeking risk, and mandatory ex post impact assessment (programme point ID: G5, G6, G20);
  • Administration of justice (programme points) — the requirement of protection of property rights and of legislative impact assessment (programme point ID: I3, I5);
  • Transparency and anti-corruption policy (programme points) — the public statement of state exposure (programme point ID: A1, A2);
  • Construction (programme points) — the publicity of construction and subcontractor data in the handling of a large construction industry bankruptcy (programme point ID: EP4).

A clarification of competences for the sake of public debate: bankruptcy proceedings are court proceedings, the asset supervisor is appointed by the court, and under the legislation the entity exercising state ownership rights may not instruct the liquidator or asset supervisor during the procedure. The government’s decision therefore modified the framework of the procedure, not its outcome — in questions of assets it is still the court and the composition with creditors that decide. Likewise: judging the suspicion of a bankruptcy offence and any bringing of charges falls within the competence of the investigating authority and of the prosecution service, not of the government.

6.4 Literature in detail

6.4.1 János Kornai: Economics of Shortage

Kornai treats the hardness of the budget constraint not as a moral but as a behavioural category: the question is whether the company’s decisions are actually constrained by its own solvency. If, from experience, the actor expects that in difficulty an external source — state support, remitted debt, soft credit — will make good the shortfall, then the constraint ceases to be a constraint.

“The soft budget constraint — unlike the hard one — is incapable of operating as an effective constraint on behaviour, and exists merely as an accounting relationship.”

“With a hard budget constraint the firm is in a relationship of economic dependence on the market. By contrast, the soft budget constraint […] strengthens the firm’s administrative dependence on the redistributing authorities.”

The second quotation is the more important one for the present case, and it is at the same time a warning about the direction of the intervention. According to Kornai’s observation the state lifeline is not neutral: it replaces market dependence with administrative dependence. A strategically prioritised procedure is not in itself a lifeline — in MIAK’s reading it is expressly a defensive instrument — but the suggestion of nationalisation would be exactly the step that exchanges market discipline for administrative assessment. This is the main reason why, in proposal 3.3, MIAK recommends acting as a creditor rather than taking the company over.

📖 Source: János Kornai: Economics of Shortage (1980)

6.4.2 Paul Krugman: The Return of Depression Economics

Krugman derives the concept of moral hazard from the insurance business and then generalises it: the concept applies to every situation in which one person decides on the extent of the risk while another bears the consequence. The edge of the argument is directed not against risk-taking but against the separation of risk from consequence.

“Eventually the term came to refer to any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly.”

“If the investment prospers, so will I; if it does not, I will declare personal bankruptcy, and walk away. Heads I win, tails you lose.”

Analysing the financial bubbles of the 1980s, Krugman demonstrates the pattern in which lenders relax collateral requirements because the ultimate risk is covered by a state background guarantee — and the author adds that the systems built up in this way often distribute credit along political connections. The structure of the Hungarian case resembles this: the combination of development bank credit, bonds and a state guarantee created a financing situation in which the bearer of the risk is ultimately the taxpayer. One of the most important elements of MIAK’s proposal 3.1 follows from this: state exposure has to be stated not when the bankruptcy occurs but continuously, by legal title — the cheapest defence against moral hazard is visibility.

📖 Source: Paul Krugman: The Return of Depression Economics

6.4.3 Daron Acemoglu and James A. Robinson: Why Nations Fail

The pair of authors traces long-run differences in economic performance back to institutional differences. They distinguish inclusive institutions — which provide property rights and market entry opportunities to a broad circle — from extractive institutions, which concentrate income and opportunity in a narrow circle. One of the volume’s most important and frequently overlooked claims is that this turn also works in reverse.

“Even though inclusive institutions have their own feedback loop […] it may happen that — because of various difficulties — these change direction and are gradually transformed into extractive institutions.”

The Venetian example the authors bring to this claim is instructive because there the inclusive institutions withered not through outside attack but through internal elite appropriation. Translated to the Hungarian situation: the institutional risk is not that the state intervenes in a bankruptcy — under given conditions this may be justified — but that the right to intervene remains permanently at the government’s free discretion. Such a power always favours whoever happens to be exercising it; regulation is the only mechanism capable of turning a change in the circle of beneficiaries into institutional improvement.

📖 Source: Daron Acemoglu – James A. Robinson: Why Nations Fail

6.5 International comparison (where relevant)

For the state handling of large, systemic corporate insolvencies, two established patterns exist in Europe. One is a rule-based, pre-announced set of criteria: the state determines above what company size, employment effect or creditor exposure it enters with special procedural rules, and grounds the decision on an independent expert opinion. The other is a crisis management mandate limited in time, which the legislature ties to a concrete economic situation, with a sunset date — that is, with a point fixed in legislation at which the measure automatically ceases unless the legislator amends it beforehand. The common element in both is that the rule is not created for the individual case; the rule precedes the case. The development of EU insolvency law also points in this direction: restructuring frameworks are built increasingly on creditor participation and early intervention, not on ex post state takeover. The peculiarity of the Hungarian rule is not its existence — the strategically prioritised procedure is not an outlandish legal institution in international comparison — but that, according to expert assessments too, the text of the norm leaves the government wide room for manoeuvre, without pre-established criteria and without an obligation of publication. MIAK’s proposals would make good this omission without abolishing the instrument itself.

Economy

  • G5 — Competition policy and anti-monopoly
  • G6 — Programme against rent-seeking and regulatory capture
  • G20 — Economic policy impact assessment system
  • G24 — Institutional quality index

Administration of justice

  • I3 — Legislative impact assessment
  • I5 — Protection of property rights

Transparency and anti-corruption policy

  • A1 — Public money dashboard
  • A2 — Public procurement transparency

Construction

  • EP2 — Housing construction data platform
  • EP4 — Construction industry transparency

Suggested new programme point: Public classification criteria and an exit condition for strategically prioritised insolvency procedures — for the Economy area.

6.7 List of sources

Press sources (MIAK press monitor, 5 September 2026 — topic 2):

Knowledge base references (specialist books):

  • 📖 János Kornai: Economics of Shortage (1980)
  • 📖 Paul Krugman: The Return of Depression Economics
  • 📖 Daron Acemoglu – James A. Robinson: Why Nations Fail

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G5, G6, G20, G24)
  • MIAK policy area: Administration of justice (programme points; programme point ID: I3, I5)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A1, A2)
  • MIAK policy area: Construction (programme points; programme point ID: EP2, EP4)
  • MIAK press monitor, 5 September 2026 — topic 2, score: 91/100

Supplementary public data sources (where used):

  • Magyar Közlöny — the classifying government decree
  • Cégközlöny (Company Gazette) — the bankruptcy procedure notices

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