Suspendarea obligatiilor de plata decurgand din contractele de credit sau de leasing. Ordonanta de urgenta nr. 37/2020 – Update. Norme de aplicare.
Suspendarea obligatiilor de plata decurgand din contractele de credit sau de leasing. Ordonanta de urgenta nr. 37/2020 – Update. Norme de aplicare.
Suspension of payment obligations for credit and leasing contracts. Emergency Government Ordinance no. 37/2020. Update: implementing rules of the GEO entry into force
Considering the worsening of new coronavirus spread, in Romania the state of emergency was established by Decree no. 195/2020 regarding the establishment of the state of emergency in the territory of Romania and numerous measures were adopted aimed at restricting or even suspending certain economic activities.
Since significant economic imbalances have already appeared and are anticipated, several measures have been adopted to protect and support the business environment, notably regarding small and medium-sized enterprises (“SMEs”), but also to the population, in order to combat this negative impact.
Within the package of legislative documents adopted by the Romanian authorities in order to support the business environment, the Emergency Ordinance no. 37/2020 regarding the granting of facilities for loans granted by credit institutions and non-bank financial institutions to certain categories of debtors (“GEO no. 37/2020”), through which a series of measures applicable to legal entities, other professionals or enterprises, as well as individuals as consumers.
UPDATE: In the Official Monitor no. 285 of 06.04.2020 published the Norms of application of GEO no. 37/2020 (“Application rules” or “AR”) referred to in the contents of GEO no. 37/2020.
GEO no.37/2020 provided facilities
GEO no. 37/2020 establishes the measure of suspending, at the debtor request, the obligation to pay the installments related to the loans, representing capital rates, interest and commissions, granted to the borrowers by the creditors until the date of entry into force of this emergency ordinance, for a period up to 9 months, but not later than 31.12.2020 (“suspension of payment obligations”).
(i) domain of facility application de aplicare al facilitatii, regarding the contracts, creditors and debtors to which the measure is applicable;
(ii) general conditions for accessing the facility by the borrowers;
(iii) specific conditions for accessing the facility, applicable to natural persons debtors and legal persons or professionals debtors;
(iv) facility effects;
(v) the procedure through which the facility can be accessed;
(vi) measures instituted in favor of creditors.
Application domain. Contracts. Creditors. Barrowers
GEO no. 37/2020 is applicable regarding:
(a) credit contracts or (b) leasing contracts which meet the following general conditions:
(i) the Romanian law is applicable to them;
(ii) the loan did not reach maturity prior to the entry into force of GEO no. 37/2020;
(iii) the creditor did not declare the anticipated maturity of the loan prior to the entry into force of GEO no. 37/2020;
UPDATE: The application rules provide two additional conditions: (i) the credit agreements were concluded until 30.03.2020, date included; (ii) the date of the final maturity of the rates repayment obligations, stipulated in the credit agreements, is subsequent to the date of 30.03.2020 inclusive.
Concluded between creditors:
(i) credit institutions;
(ii) non-banking financial institutions
(iii) branches of foreign credit institutions and non-banking financial institutions operating in the territory of Romania;
(i) natural persons, category in which are included and natural persons who are professional:
– authorized natural persons;
– individual and family businesses;
– the liberal professions and those practiced under special laws, regardless of the form of exercise of the profession;
Note: In the GEO no. 37/2020 it is not clear whether, where reference is made to natural persons, the norms refer also to the category of natural persons who have the quality of professional.
(ii) legal entities, except credit institutions.
General conditions to access the facility
At the date of establishing the state of emergency on the territory of Romania – not at the date of entry into force of GEO no. 37/2020 – the debtors do not record overdue payments due;
Exceptionally, the debtors who recorded arrears on the date of the establishment of the state of emergency, could benefit from a facility if they make their outstanding payment prior to requesting the suspension of the payment obligation;
The debtors’ incomes have been directly or indirectly affected by the serious situation generated by the COVID-19 pandemic, according to the rules of application of this emergency ordinance.
UPDATE: The application norms detail the conditions for accessing the facility by reference to each category of debtors covered by GEO no. 37/2020, respectively:
(a) Natural persons debtors;
(b) Natural persons debtors having the quality of professionals: authorized natural persons, individual enterprises and family enterprises, the liberal professions and those practiced under special laws, regardless of the form of exercise of the profession;
(c) Legal entities debtors.
Specific conditions to acces the facility
The debtor declares on his own responsibility that:
(i) the serious situation generated by the COVID-19 pandemic affected, directly or indirectly, the personal income of the debtor or his family;
(ii) in order to determine the impact of the revenues, their level must be related to the level recorded before the declaration of the state of emergency;
(iii) the debtor is unable to fulfill the payment obligations related to the credit as a result of the intervention of one or more of the following causes, which the implementing rules list by way of example:
(a) the entry of the debtor/members of his family into a technical unemployment as a result of the closure/restriction of the activity of the employer;
(b) dismissal of the debtor/members of his family,
(c) reducing the salary of the debtor/members of his family,
(d) placing the debtor in institutionalized quarantine or isolation at home,
(e) COVID-19 desease confirmation.
Specific conditions regarding professional debtors and legal entities
Note: from the interpretation of the text GEO no. 37/2020 and from the wording used by the Implementing Norms it appears that these specific conditions must be fulfilled by the debtors legal persons and natural persons who have the quality of professionals, excluding only the natural persons who have the quality of consumers.
(i) The debtors mentioned above must meet one of the following alternative conditions:
a) interrupt the activity totally or partially as a result of the decisions issued by the competent public authorities according to the law, during the period of emergency state decreed and hold the certificate of emergency situations issued by the Ministry of Economy, Energy and Business Environment – that is, the debtors hold an emergency certificate of type 1 (blue); or
b) hold the certificate for emergencies issued by the Ministry of Economy, Energy and Business Environment, which establishes, based on the declarations on the own responsibility of the debtors, the diminution of incomes or receipts by at least 25% in March 2020, in relation to the average January and February 2020 – ie the debtors hold a type 2 emergency certificate (yellow); or c) is in a situation of “partial or total interruption of the activity as a result of the decisions issued by the competent public authorities during the decreed state of emergency”;
Note: from the defective way in which the text of GEO no. 37/2020 does not appear if this last alternative condition was provided as a stand-alone condition, in which it would not be necessary to obtain the emergency certificate or it is a simple formulation error, which overlaps with the hypothesis from point a).
(ii) Cumulatively, the debtor must not be insolvent on the date of requesting the suspension of the credit repayment, according to the information available on the website of the National Office of the Trade Register.
UPDATE: The application rules additionally stipulate that natural persons debtors who have the status of professionals and legal persons debtors must declare on their own responsibility that:
(i) The serious situation generated by the COVID-19 pandemic affected their own incomes, directly or indirectly, by reference to the level recorded before the declaration of the state of emergency and
(ii) It is impossible to honor the payment obligations related to the loan, their activity being affected under the following conditions:
(a) in the case of natural persons having the quality of professionals, as a result of the interruption of the activity, in whole or in part, as a result of the decisions issued by the competent public authorities according to the law, during the state of emergency decreed, with the consequence of the restriction of the retail market, the restriction the number of employees, diminishing the number of its suppliers;
(b) in the case of debtors legal entities:
If they hold a certificate of emergency situations issued by the Ministry of Economy, Energy and Business Environment (“MEEMA”) and
If one of the following has occurred: the restriction of the sales market, the reduction of the number of employees, the decrease of the number of suppliers.
Note: although through the Implementing Norms of GEO no. 37/2020 it was necessary to clarify the conditions in which the debtors can access the offered facilities, the forms used by the Implementing Norms are unclear and repetitive, the eligibility conditions being difficult to detect from the legal norms. From this perspective, it remains unclear:
If (and why) a new declaration on own responsibility is required in the case of legal persons who already hold a certificate of emergency situations;
If from this facility any debtor could be the legal person who has suffered one of the consequences provided by the Implementing Norms, even if he does not hold the certificate of emergency situations.
The effects of accesing the facility
main effect: the suspension of the obligation to pay the installments due for the loans, representing capital rates, interest and commissions, for a period of maximum 9 months, which cannot exceed the date of 31.12.2020.
(i) the possibility of exceeding the maximum period of credit with a period equal to the duration of suspension of payment obligations;
UPDATE: The application norms provide for the possibility of extending the maximum duration of the credits granted through the “First house” program.
(ii) in the case of the borrowers natural persons for whom the extension of the maturity of the loans exceeds the age limit, the creditors will proceed to the restructuring of the loans so that the borrowers will fit the age limit at the date of the maturity of the loan;
(iii) the interest due by debtors corresponding to the outstanding amounts suspended to the payment shall be capitalized on the balance of the existing credit at the end of the suspension period, and the capital thus increased shall be paid in installments for the remaining period until the new maturity of the loans, after the period suspension.
Note: for the interest by which the capital is increased, the interest will be due, according to the conditions of the credit/leasing contract.
Exception from the capitalization of the interest: for the mortgages contracted by natural persons, the interest related to the period of suspension represents a distinct and independent debt in relation to the other obligations arising from the contract;
Note – consequences of the exception: – the interest due for this debt is 0% and will be paid by debtors, in 60 equal monthly installments, starting with the month immediately following the end of the deferral period.
UPDATE: the creditor has the obligation to communicate, within 5 days, the schedule of repayment of these payments both to the National Credit Guarantee Fund for Small and Medium Enterprises (“FNGCIMM”), together with the request for the issuance of the guarantee letter.
The payment of this distinct debt is guaranteed 100% by the Romanian state, by guarantee letters.
In case the state pays the creditors certain amounts based on the letters of guarantee, they will constitute budgetary debts and will be recovered from the debtors by the competent fiscal bodies of the National Agency for Fiscal Administration (“ANAF”), according to the provisions of the Procedural Code tax.
Debtors owe ancillary fiscal obligations that are calculated and communicated by the competent fiscal bodies of ANAF according to the Code of fiscal procedure.
UPDATE: AR details the procedure for individualizing and recovering the debts resulting from the execution of the guarantee letters.
UPDATE: As a rule, the guarantees related to the credit contact are maintained, being necessary:
(i) notification of the guarantor by the creditor and
(ii) obtaining the guarantor’s agreement.
In the case of loans granted to borrowers, with the exception of mortgages concluded with natural persons borrowers, AR stipulates that the effects of the modification of the credit agreements according to the provisions of GEO no. 37/2020 extend directly to any co-debtors, guarantors, including guarantors, who have guaranteed the obligation of the debtor, as well as any other parts of the credit agreement thus amended, only with their prior agreement.
The maximum period of validity of the guarantees provided for in the normative acts of special character regulating the government guarantee programs can be extended with a period equal to the duration of the suspension of the payment obligations approved in the conditions of GEO no. 37/2020.
Procedure through which the facility can be accesed
The debtors must send to the creditors a request that fulfills the following conditions:
– it is transmitted in letter format or by electronic mail, to the contact details specified in the credit agreement or through another remote communication channel offered by the creditor; or
– if the debtor cannot transmit the application in the form above, he can formulate it orally, by telephone, to a dedicated telephone number that will be announced by each lender on his website, in which case the lender has the obligation to register call.
It is transmitted within 45 days from the entry into force of GEO no. 37/2020 (30.02.2020).
UPDATE: The application rules provide that the application must be accompanied by the declaration on its own responsibility necessary to verify the eligibility by the creditor.
UPDATE: The application rules provide the obligation of the creditor to:
– analyze the request made by the debtor
– verifies the classification of the credit in the eligibility conditions; and
– communicates to the debtor his decision to approve / reject the request within maximum 15 calendar days from the date of receiving the request.
The approval decision must include:
– the number of installments whose postponement is requested by the debtor;
– approval of the payment suspension.
The approval decision is communicated to the debtor in letter format or by electronic mail, at the contact details specified in the credit agreement or by another remote communication channel offered by the creditor, or by telephone, in compliance with the obligation of the creditor to record the call, in depending on the option expressed by the debtor.
Note: Neither GEO no. 37/2020, neither AR regulates the way in which the creditor verifies the declaration on his own responsibility transmitted by the debtor for establishing the eligibility, respectively if the creditor has the right to request additional documents or to refuse to grant the facility if he had reasonable reasons to consider that the debtor declared false aspects, although the declaration fulfills the necessary form requirements.
In the case of secured loans, the creditor must also notify the guarantor regarding the extension of the validity of the guarantee commitment and the modification of the clauses of the guarantee commitment in order to grant the facility.
Note: The extension of the contractual duration has effects from the date of the communication of the suspension request addressed to the creditors, provided that the requests are approved by the creditors.
The modification of the credit agreements is produced by the effect of the law, without the conclusion of additional documents, and the creditor notifies to the debtor the contractual clauses modified for the implementation of the provisions of GEO no. 37/2020 and the new credit repayment schedule, within 30 days of receiving the request, as stipulated by the Implementing Rules.
Measures instituted in favor of creditors
In certain conditions, as shown above, the interest on the suspended rates is capitalized, and the borrowers will owe the interest for this under the terms of the credit agreement.
The payment of the interest related to the period of suspension for the mortgage loans contracted by natural persons, which does not capitalize, but is going to constitute a distinct debt, is guaranteed in 100% by the Romanian state, through the MFP.
To this end, MFP is authorized to mandate FNGCIMM for issuing letters of guarantee on behalf and on behalf of the state in favor of creditors, based on the Implementation Convention to be concluded.
The granting and running of state guarantees is made on the basis of a guarantee agreement concluded between the F.N.G.C.I.M.M. and creditors. The model of the guarantee agreement is approved by order of the Minister of Public Finance within 15 days from the entry into force of this emergency ordinance.
Note: the model of the Guarantee Convention and the Implementing Convention will be approved by order of the MFP within 5 days from the entry into force of the Implementing Norms.
UPDATE: according to the Application Norms, within 5 days from the entry into force of the application norms, the creditors involved in accessing the guarantee facility provided by GEO no. 37/2020 have the obligation to notify FNGCIMM regarding the conclusion of the guarantee agreement.
Each creditor communicates to FNGCIMM, on his own responsibility, the total value of the guarantee commitment resulting from the cumulation of the payment amounts according to the payment schedules of the amounts representing the interest due by the debtors.
UPDATE AR details:
– the issuing procedure and the characteristics of the guarantee letters for the payment obligations of the interest rates for mortgage loans, contracted by natural persons borrowers;
– the validity and the obligation to monitor the guarantee letters, as well as the obligations imposed on the creditors in it regard;
– execution of guarantee letters and making payments under guarantee letters: in essence, the execution requests;
– the guarantee is transmitted by FNGCIMM by each creditor until the 20th of each calendar month, consolidated by the creditor, for the debtors in the portfolio, accompanied by certain documents.
The purpose of the measure established by GEO no. 37/2020 is to allow debtors affected by the COVID-19 pandemic to benefit, upon request, from the suspension of payment obligations related to credit or leasing contracts for a period from one month to nine months, but which does not exceed dated 31.12.2020.
Although the Implementing Norms have brought a number of clarifications and additional information, they have not fully clarified a number of important issues, such as the eligibility conditions applicable to legal entities, the regime applicable to individuals who have professional status or the rights of the creditor in the process. for evaluating received requests.
Some of the solutions adopted seem to be unjustified or insufficiently correlated – for example, although the facility was adopted in relation to a long-term problem, which is why it can last for up to 9 months, it is inexplicable why it can only be accessed by the debtors who suffered reductions of the receipts in March, excluding, at least apparently, those whose receipts begin to fall in the following months, for the same reasons.
The suspension of the payment obligations of the borrowers will also bring additional obligations, arising from (i) the extension of the credit period, (ii) the capitalization of the interest, in the case of certain loans, as a consequence of the increase of the total interest paid, (iii) the risk arising from the guarantee offered by the state , in the case of mortgages concluded by natural persons.
Following the application of this facility, the creditors will either receive a higher interest or benefit from the guarantee of certain debts through guarantee letters issued by the state, thus reducing the risks that could have affected them by implementing the facility to suspend the obligations of the payment.
Through the AR, a series of additional obligations were imposed on the creditors, some of them being obligatory to be fulfilled in very short terms (e.g. within 5 days from the entry into force of the AR).