Romanian Government has passed new measures designed to support specific categories of Romanian debtors facing financial difficulties due to the COVID-19 pandemic. Under Emergency Ordinance No. 37 of 30 March 2020 (the Moratorium Ordinance), individuals, authorised individuals carrying out professional activities (persoane fizice autorizate in Romanian), individual and family enterprises, professionals carrying out their activity based on special laws (such as lawyers) as well as legal entities (except credit institutions) affected by the COVID-19 pandemic can submit a request to their lenders and/or leasing providers (credit institutions or non-banking financial institutions and Romanian branches thereof) to postpone due loan and/or leasing payments (principal as well as interest and/or fees) for up to 9 months. The Moratorium Ordinance entered into force on 30 March 2020.
We note that the addition of leasing payments within the scope of the Moratorium Ordinance was made in a later drafting stage, in a rather inconsistent manner; this is why it is unclear whether all the legal provisions are envisaged to be applied to loans or to leasing also (although references throughout the law are made to credits).
Postponement requests can be made during a 45-day period. The postponement may be requested for any time period ranging between 1 and 9 months but the postponement cannot go beyond 31 December 2020.
What next? The Moratorium Ordinance states that further details on various aspects are to be included in implementation rules (the Implementation rules) to be issued within 15 days. Thus, the application of the Moratorium Ordinance until the norms are available will be an unclear territory.
Who can apply for the moratorium? Individuals, the entities detailed in the preamble as well as legal entities (except credit institutions) whose incomes have been directly or indirectly affected by the COVID-19 pandemic. While the direct concept seems rather straightforward, details on the meaning of indirectly affected are expected to be unpacked in the Implementation Rules.
The borrower can benefit of the moratorium only if (i) the loan was not overdue prior to the entry into force of the Moratorium Ordinance, (ii) the lender has not accelerated the loan prior to the entry into force of the Moratorium Ordinance, and (iii) no payment defaults were registered on such loan when the state of emergency was declared in Romania (alternatively, the debtor is allowed to make the overdue payments prior to making the moratorium request). In addition to the foregoing conditions, debtors (except individuals) are only eligible if (iv) they hold a prescribed emergency certificate evidencing an at least 25% revenues decrease in March 2020 (compared with average in January and February) or that their activity is completely or partially interrupted as a consequence of the authorities’ decisions, and (v) must not be insolvent according to Commercial Registry evidences when they make the moratorium request.
What lenders and agreements are covered by the moratorium? The Moratorium Ordinance states that it applies to loans/credits (without defining such concepts but using them alternatively) and leasing granted by credit institutions and non-banking financial institutions and Romanian branches of these. It therefore remains to be seen whether such loan/credit concept will be construed restrictively (as a loan granted pursuant to a loan agreement) or more widely and if so, how much widely (as also including certain other crediting arrangements).
In our view it is debatable whether payments under other banking products involving a crediting element can be subject to the Moratorium Ordinance (e.g. factoring arrangements, cash-pooling arrangements or derivative transactions). In practice – we expect different approaches on case by case basis until further clarifications are provided.
Furthermore, we believe repayments under loans extended by lenders which are not credit institutions or non-banking financial institutions (such as loans extended by international financial institutions) or repayments under capital markets debt instruments (bonds/notes) are not subject to moratorium.
An interesting topic is whether the Moratorium Ordinance may also apply to loans granted by foreign lenders to Romanian borrowers. Having regard to the preamble of the Moratorium Ordinance, it is our understanding that the Moratorium Ordinance was not envisaged to apply to loans granted by foreign lenders. However, considering the definitions of the foregoing types of lenders, we do not exclude that a Romanian court of law applies such moratorium also to loans granted by foreign lenders (considering the Moratorium Ordinance as providing for public order or immediate application rules in Romania.). The same goes for the foreign-law governed loans.
Furthermore, an analysis will need to be carried out on a case by case basis for complex scenarios – not regulated by the Moratorium Ordinance, such as where the co-borrowers are both Romanian and not Romanian entities.
Will the moratorium kick in automatically? No, the moratorium will apply upon debtor’s request; such request would be analysed and approved by the creditor subject to the provisions of the Implementation rules. Within 30 days as of receipt of such a postponement request, the creditor shall notify the debtor on the updated contractual provisions implementing the Moratorium Ordinance.
Are there any financial implications for such payment moratorium? Yes. Interest does accrue during the payment moratorium for the amounts whose payment is postponed. The interest thus accrued during the postponement period will be capitalized at the end of the suspension period, i.e. added to the loan balance and thereafter be subject to interest, except as regards mortgage loans to individuals (no capitalisation of the interest for such loans). The loan balance thus increased shall be paid in instalments until the new maturity of the loan. However, as regards mortgage loans to individuals, the interest due for the moratorium period is to be paid in equal instalments during a 60-month period following the end of the postponement period and will be guaranteed by the Romanian State.
 Reference to authorised individuals carrying out professional activities (persoane fizice autorizate in Romanian), individual and family enterprises is to those organised pursuant to Government Emergency Ordinance No. 44 of 16 April 2008.
 Under Decree No. 195/2020, the President of Romania has declared a state of emergency in Romania as of 16 March 2020, for a duration of 30 days, which can be further extended.
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