In this issue:
- The Government Emergency Ordinance No. 37/2020 on the support facilities for loans granted by credit institutions and non-banking financial institutions to certain categories of debtors
The Government Emergency Ordinance No. 37/2020 on the support facilities for loans granted by credit institutions and non-banking financial institutions to certain categories of debtors (GEO 37/2020) is effective as of 30 March 2020, when published in the Official Gazette of Romania, Part I No. 261 of 30 March 2020.
The beneficiaries of GEO 37/2020
The beneficiaries of GEO 37/2020 will be individuals, as well as certain professionals (authorized individuals, individual enterprises and family businesses, liberal professions and those performed under special laws, notwithstanding the form of practicing the profession) and legal entities, except for credit institutions (Debtors).
The purpose of GEO 37/2020
In accordance with the provisions of GEO 37/2020, the Debtors may request banks, non-banking financial institutions and foreign branches thereof operating in Romania (Creditors), the stay on credit instalments, interests and fees due under credit and leasing agreements concluded before 30 March 2020.
Criteria on the stay on credit instalments, interests and fees due under credit and leasing agreements
- Deadline - Debtors may request (by mail, e-mail or verbally, by phone), by 14 May 2020, the stay on credit instalments, interests and fees due under credit and leasing agreements for a period that may vary between one month and nine months and which cannot exceed 31 December 2020; additionally, the maximum crediting period under the Creditors’ regulations may be exceeded by a period equal to the stay period of the payment obligation;
- Capitalization of interest - interest on outstanding amounts is capitalized in the credit balance as of the end of the stay period, except for retail mortgage loans, where the interest for the stay period represents a distinct and independent receivable (guaranteed by the Romanian state);
- Conditions to be assessed by the Creditors – the Creditors will review the Debtors’ requests in accordance with the provisions of GEO 37/2020 and its implementing norms (which are to be adopted), as follows:
- the loans must not be matured or accelerated;
- the arrears must be paid before the request for stay;
- the Debtors’ income must have been directly or indirectly affected by the current situation - for Debtors who are not individuals, this may be evidenced by the state of emergency certificates issued by the competent authorities (aspect to be detailed in the implementing norms of GEO 37/2020);
- for Debtors who are individuals, where the extension of the loan maturity exceeds the age limit under the Creditors’ regulations on lending, the Creditors shall restructure the loans without exceeding such age limit.
Amendment of the loan agreements following the application of GEO 37/2020
In accordance with GEO 37/2020, the amendment of the loan agreements is effective by operation of law, without the conclusions of any addendum; the Creditor must, within 30 days as of the receipt of the Debtor’s request, notify the Debtor in respect of the amended contractual terms for implementing the stay.
Other legislative initiatives
On 31 March 2020, the Senate, as first Chamber, has adopted a similar legislative measure, namely the Draft law on the stay of credit reimbursement. As per this draft law, the term “creditors” also refers to “debt recovery entities” and the stay measures apply also to the enforcement proceedings initiated by the creditors before the entry into force of the law (which are going to be suspended until 31 December 2020). The draft law is to be submitted before the Chamber of Deputies, as decisional chamber.
Loredana Duică – Senior Associate, Radu și Asociații SPRL
For additional information, please contact:
Radu Diaconu, Associate Partner, Radu și Asociații SPRL