Romania: Moratorium on loans
Almost one week after being publicly announced by Romanian officials, the Emergency Ordinance no. 37/2020 on granting certain facilities for loans granted by credit institutions and non-bank financial institutions to certain categories of debtors (OUG 37) was published in the Official Gazette in a different form than the one initially announced as a result of extensive negotiations with the banking system.
In brief, the OUG 37 provides for the possibility to suspend payment of the instalments (representing part of capital, interests and commission) due under loans granted to debtors by the banks, non-bank financial institutions (NBFIs), branches opened in Romania by foreign credit institutions and NBFIs (collectively defined as creditors) for a period of one to nine months, but no later than until 31 December 2020.
The parties benefiting from the moratorium are the following categories of debtors under loan agreements and leasing agreements:
- authorised individuals (personae fizice autorizate),
- individual enterprises (intreprinderi individuale),
- family enterprises (intreprinderi familiale),
- persons exercising liberal professions as well as other professions performed based on special laws, irrespective of the form in which they exercise the profession,
- legal entities (personae juridice).
The suspension of payments will be granted only at the request of the debtors and only if the following conditions are cumulatively met:
- By individuals:
- the borrower’s revenues have been directly or indirectly affected by the serious situation generated by COVID-19 pandemic, in accordance with the rules which are to be enacted in application of OUG 37;
- the loan was granted prior to the entering into force of OUG 37, has not reached maturity and has not been made prematurely due and payable by the creditor;
- at the date of instituting the emergency state in Romania (i.e. 16 March 2020) there were no unpaid amounts under such loans, or if the debtor has paid the due amounts by the date of request for the application of a moratorium.
- By all other categories of debtors:
- their activities are totally or partially suspended for the duration of the emergency state as an effect of the decisions issued by the competent public authorities, according to the law;
- they possess the certificate of emergency situations issued by the Ministry of Economy, Energy and Business Environment proving, based on declarations by the debtor, a reduction in their revenues or of incomes by at least 25% in March 2020 compared to the average for the months of January and February 2020 or the partial or total suspension of their activities as an effect of the decisions issued by the competent public authorities;
- they are not in insolvency at the date of request for the application of a moratorium, in accordance with the information available on the web page of the National Office of Trade Registry.
To benefit from the moratorium, the debtors must send the creditor a request to this effect within a maximum of 45 days from 30 March 2020, either by post or electronic means, using the contact details indicated in the loan agreement or other means of remote communication provided for by the creditor.
If the debtor is not able to send the request using the means of communication described above, it can also formulate the request verbally by phone using a dedicated phone number announced by each creditor on its internet page, in which case the creditor is obliged to register the conversation.
The debtor’s request is to be analysed and approved by the creditor in accordance with the standards to be enacted in application of OUG 37.
The moratorium will lead to an extension of the term of the loans by a period equal to the duration of the moratorium, while for individuals for whom the extension of maturity will exceed the maximum term provided by the creditors’ regulations, the creditors will proceed to restructuring of the loans observing the limits on the term.
The moratorium will enter in force on the date of communication of the request by the debtor if the request is approved by the creditor, without the need to conclude any amendment agreement in this respect. The creditor has to notify to the debtor about the contractual clauses amended in order to implement the OUG 37 within 30 days of receipt of the request.
The interest due from the debtors corresponding to the amounts due and payment of which is suspended is to be added to the capital which will be paid in instalments after the end of moratorium period.
In the case of mortgage loans granted to individuals, the interest due for the moratorium period will be considered as a separate and independent debt bearing 0% interest which will be repaid in 60 equal monthly instalments starting after the end of the moratorium period.
The Romanian State, through the Ministry of Finance will guarantee 100% of the interest payments calculated for mortgage loans granted to natural persons. In this context, the Ministry of Finance will empower F.N.G.C.I.M.M. to issue the letters of guarantees in favour of the creditors in the name and on behalf of the state.
To this end, each creditor has to notify F.N.G.C.I.M.M. about the total value of the guarantee representing the cumulated amount of interest due from the debtors.
The debts resulting from the payment of the state guarantees and the amounts paid to the creditors are government debts and will be recovered from the debtors by the competent fiscal authorities of the National Agency for Fiscal Administration.
In the event of non-payment of the obligations resulting from the state guarantees at their maturity, debtors will owe interest which will be communicated by the competent fiscal authorities.