GEO 37/2020 on the granting of certain facilities for the loans granted by credit institutions and non-banking financial institutions to certain categories of debtors (“GEO 37/2020”) has entered into force on 30 March 2020 allowing both natural persons and legal entities, other than credit institutions, , to request their creditors under credit and leasing agreements the postponement of the payment of instalments, representing capital, interest and commissions, subject to the fulfilment of certain requirements. In its initial form, the request had to be made by 15 June 2020, with the suspension effects of the moratorium lasting up to maximum 31 December 2020.
Starting with 1 January 2021, GEO 37/2020 was amended by the Emergency Government Ordinance no. 227/2020 (“GEO 227/2020”) (together the “Amended GEO 37/2020”), which brought significant changes to the provisions of GEO 37/2020, mainly for the purpose of extending the suspension effects of the moratorium and the deadlines applicable to the debtors eligible to benefit from the moratorium on loan payments in the context of the COVID-19 pandemic.
For additional details regarding the initial provisions of GEO 37/2020 and its scope of application, please refer to the following articles [HERE and HERE].
AMENDMENTS UNDER THE AMENDED GEO 37/2020
A. Eligible debtors under the Amended GEO 37/2020
The GEO 227/2020 does not modify the category of debtors which may benefit from the extension. Thus, the debtors which may benefit from the facilities granted under the Amended GEO 37/2020 are any natural person, authorized person, family or individual enterprise, persons exercising a liberal profession or other professions exercised according to a special law, as well as any legal entity (excluding credit institutions), which are part of credit and leasing agreements.
The main requirements which must be fulfilled by debtors are: (i) they are a party to loan agreements entered into by 30 March 2020 and those did not reach maturity, nor did the relevant creditors declare the anticipated maturity by 31 December 2020 inclusive; and (ii) they have no outstanding amounts under the respective credit agreement at the date of submitting the request for the postponement of payments.
In addition, the Amended GEO 37/2020 provides that all categories of debtors other than natural persons must also fulfil the following conditions:
• they must not be insolvent as of the date of requesting the postponement of payments; and • they present an affidavit which shows a decrease in average income of the last 3 (three) months prior to the request for the postponement of loan payments by at least 25% compared with the same period of 2019 or 2020, as the case may be.
The requirement for debtors which are legal entities to obtain emergency certificates issued by the Ministry of Economy, Energy and Business Environment has not been taken out from the Amended GEO 37/2020. It is not clear whether the intention was to maintain this requirement strictly for those debtors which did not request until now the postponement of payments under the law and, if indeed required, how could these certificates be obtained at this stage given that the period during which they could be issued by the Ministry of Economy, Energy and Business Environment has expired on 15 September 2020. We would expect this matter to be further clarified through subsequent legislative changes.
Subject to the above eligibility criteria, the Amended GEO 37/2020 applies to debtors which:
a) did not request the postponement until 15 June 2020; or b) have been granted postponement of payments under GEO 37/2020; or c) benefited from a non-legislative moratorium.
In all cases above the maximum period of the postponement of payment obligations (which includes, if applicable, the previous period of postponement based on both legislative and non-legislative moratoria) cannot exceed 9 (nine) months.
B. Payments that can be postponed
Debtors fulfilling the above-mentioned criteria have the right to request the creditors under the credit and leasing agreements the postponement of the payment of instalments, representing capital, interest and commissions, for a period ranging between 1 (one) and 9 (nine) months, in relation to loans granted by 30 March 2020, which is the date when the GEO 37/2020 has entered into force.
C. The procedure through which the debtors may benefit from these facilities
To benefit from the postponement of payments, the above-mentioned debtors must request this facility from the creditor no later than 15 March 2021, so that the creditor can analyze and issue the decision until 31 March 2021.
The Ministry of Public Finances is expected to issue new norms in relation to the Amended GEO 37/2020 within 10 days after the publication of GEO 227/2020, namely by 11 January 2021. No draft of such norms has been published so far, thus we will be closely monitoring their publication and will revert with additional information once they become available.
D. Interest under mortgage loans
According to GEO 37/2020, the interest due for the principal amounts the payment of which has been postponed will be capitalized with respect to all types of loans, except for the mortgage loans granted to natural persons.
For mortgage loans granted to natural persons which requested the postponement of payments by 15 June 2020 for a period shorter than 9 months and which intend to prolong this period after 1 January 2021, the interest will be calculated by cumulating the interest owed for the initial postponed period with the interest owed for the additional postponed period, without capitalizing such amount. The resulting interest will be paid gradually within 60 months in equal instalments starting with the moment when the second postponement has ceased.
The Romanian State, through the Ministry of Finance, will guarantee 100% of the payment of interest calculated as per the above, in relation to mortgage loans granted to natural persons.