Bayer Construct Has Filed for Composition Proceedings — What Does This Mean in Practice?
On August 26, 2026, Bayer Construct Zrt. filed a petition with the competent court to open composition proceedings against itself. The company’s owner, Attila Balázs, informed employees of the decision by letter and subsequently confirmed the step publicly. Management stressed that operations will continue during the proceedings: the company intends to complete ongoing investments, pay the contractors involved in construction, and continue to ensure wages and other benefits are paid on an ongoing basis.
Bayer Construct started out in 2002 as a ten-person business building the structural shells of family homes, but over the past two decades — under the previous government — it grew into one of Hungary’s most significant construction and real estate development groups. Under the direction of Attila Balázs, the group — which includes Bayer Construct alongside companies such as Bayer Property and Bayer General — has taken part in large-scale projects such as the Puskás Aréna, Etele Plaza, and Agora Budapest, while its own residential developments include Corvin 5 and the Balance Garden housing estate. In recent years the company secured a particularly large volume of state contracts and investments, but since the April elections it has faced a series of setbacks. First the priority status of the 3,500-unit Szilas Liget housing estate was withdrawn, followed by that of the Láng Negyed and Club Aliga developments, and the Hungarian government then suspended the building permits for housing projects linked to the Otthon Start program.
The most severe blow, however, came from the collapse of the group’s by far largest project, the Zugló City Center development. The Hungarian National Asset Management company and the developer signed a preliminary agreement in November 2023 for an office building intended as a government district, known as Zugló City Center, on condition that by June 30, 2026 a third party’s pre-emption right would be deleted from the property registers. This deletion did not take place — the district municipality of Zugló retained its pre-emption right on certain building plots — and as a result, on August 3, 2026, the state withdrew from the purchase citing breach of contract, and may claim, in addition to the purchase price installments already paid, twice the deposit as a penalty for non-performance, plus further damages. The developer takes the position that, on the contrary, the preliminary agreement remains in force and that the complex was completed on time. Litigation with the state is expected, and the Zugló municipality is also considering legal action. According to the company, this dispute — worth several hundred billion forints — and the resulting uncertainty, combined with other developments increasing its overall financial exposure and unfavorable market conditions, ultimately led to the decision to initiate composition proceedings.
It is worth clarifying what composition proceedings actually mean in legal terms. Importantly, composition proceedings are not the same as bankruptcy in the colloquial sense. Under Hungary’s Act XLIX of 1991 on Composition and Liquidation Proceedings (Cstv.), this is a distinct procedure from liquidation, which — unlike liquidation — can only be initiated by the debtor company itself, in order to prevent or remedy insolvency. Its purpose is not to wind up the business but, on the contrary, to give the debtor an opportunity to reach a settlement with its creditors and continue operating while settling its debts.
By filing the petition with the court and having it published, the debtor obtains a 180-day payment moratorium: during this period, as a general rule, creditors may not initiate or continue enforcement proceedings against the company, nor may they request that liquidation be ordered against it. During the proceedings, the court appoints an administrator who supervises the debtor’s operations, monitors payments, and takes part in negotiations with creditors.
Meanwhile, creditors must register their claims with the administrator within the deadline set out in the public notice; a creditor who misses this deadline may lose the ability to enforce its claim in these proceedings. The purpose of the proceedings is to reach a composition agreement, which may include rescheduling payments, installment arrangements, or a partial waiver of claims. If the parties reach agreement within the deadline, the debtor may continue operating in accordance with the terms of the settlement. If no agreement is reached, the court will order liquidation proceedings against the debtor.
In practice, all of this affects the company’s contractual partners differently depending on their legal relationship with it. Once composition proceedings are ordered, claims against Bayer Construct cannot temporarily be enforced through execution, and liquidation proceedings cannot be initiated against the company during the payment moratorium. This means subcontractors and suppliers involved in construction, as well as the company’s other creditors, should formally register their claims as soon as possible, within the deadline published by the court or the administrator — failing to do so may result in the loss of their claim in these proceedings. It is also advisable to document existing contracts, certificates of performance, and any invoices issued but not yet settled, since these will form the basis of the settlement negotiations. Parties should be prepared for the final settlement to result — depending on its content — in a partial waiver of claims or longer, rescheduled payment deadlines. Decisions on performing, amending, or terminating ongoing contracts should be made with legal advice, bearing in mind the administrator’s approval powers as well.
A separate issue concerns those who have bought, or are planning to buy, residential property from one of the Bayer Group companies — whether an already completed unit in a housing estate or a unit in a project still under construction. For them, the key question is how the portion of the purchase price already paid is secured: regulations on residential construction in certain cases require buyer payments to be held in a segregated, blocked payment account or covered by a bank or insurance guarantee, and the contract — or any preliminary agreement — should make clear what security the buyer is entitled to in the event of the developer’s insolvency. It is also important to check the land registry entries: it is worth verifying whether a retention of title, a prohibition on alienation and encumbrance, or another security right in favor of a third party has been registered in the buyer’s favor, as this significantly affects the legal position in the event of any liquidation.
If handover of the property and registration of title have already taken place, the buyer’s legal position is, as a general rule, considerably more stable than that of those whose contracts have not yet been performed, since their ownership exists independently of the developer’s financial situation — although they may still lose any warranty claims if the company is later liquidated. Those whose contracts have not yet been performed — for example, who have only paid a deposit or down payment, or whose unit is still under construction — should contact the developer as soon as possible, and the administrator if necessary, to clarify the schedule for continuing the project and the fate of amounts already paid. It is worth reviewing the sale and purchase agreement and its annexes again, paying particular attention to the provisions on delay, frustration, and withdrawal, as well as to the legal basis (deposit, down payment, purchase price installment) and the security under which the paid amount was transferred. If the security is absent or only partial, the buyer — as a creditor — may also find it advisable to register a claim in the composition proceedings, bearing in mind the preclusive deadline. It is recommended that this be assessed individually, with the involvement of legal counsel, based on the specific contract and the current status of the project, before the buyer makes any further payment or legal declaration.
The above is a general summary for information purposes only and does not replace legal advice tailored to individual cases. If Bayer Construct’s composition proceedings affect you as a creditor, subcontractor, or homebuyer, our office is available to assist with claim enforcement and an assessment of your contractual position.
Disclaimer: this article is a translation of our original article written in Hungarian, which you can find here.
