Additional Amendments related to Slovenian Mandatory Moratorium on Banks Loans

Author: Mia Kalas, SELIH & PARTNERJI Law Firm

We have previously reported on the emergency law concerning moratorium on banking loans (Zakon o interventnem ukrepu odloga plačila obveznosti kreditojemalcev, “ZIUOPOK”) and on the amendments and certain additionally adopted measures.

On 28 April 2020, the Slovenian Parliament adopted the Law Amending the Act on Intervention Measures for Suppression of COVID-19 Epidemic and Mitigation of its Consequences for Citizens and the Economy, which includes certain amendments of the sureties for loans, which are subject to the moratorium under the ZIUOPOK, as well as amendments of certain additionally adopted measures concerning enforcement and bankruptcy procedures which are important for creditors and debtors.

The most significant substantive amendments introduce certain additional conditions and restrictions of the validity of state sureties for the borrowers’ obligations suspended under the ZIUOPOK. There are also a few important editorial amendments which eliminate the inconsistencies of the previous wording.

In order to benefit from a summary of all information available so far in one article, please see below an update of the article of 6 April 2020 where the updates are marked in bold and italic.

Measures marked in bold and italic entered into force on 1 May 2020.

I. SUMMARY OF ZIUOPOK (WITH AMENDMENTS)

The ZIUOPOK entered into force on 29 March 2020. The measures imposed thereunder shall be effective for 18 months as of cessation of the reasons for them, which shall be established by a resolution to be adopted by the Slovenian Government.

The ZIUOPOK is applicable to the following lenders:

• banks and savings banks with seat in Slovenia;
• Slovenian branches of banks of EU member states, licensed to perform banking services in Slovenia;

(hereinafter “banks”).

Eligible borrowers include:

• companies with seat in Slovenia;
• co-operatives, societies, institutes, foundations, physical persons employing workers, self-employed persons, all with seat / permanent residence in Slovenia (as applicable);
• farmers;
• physical persons (i.e. consumers) who are Slovenian citizen and have permanent residence in Slovenia

(hereinafter “borrowers”).

General description of the measure:

The bank shall be obliged to grant to the borrower (at its request) a 12-month suspension of all payment obligations and a corresponding prolongation of repayment schedule (including final maturity date). The maturity of security agreement shall also be prolonged. During the moratorium, interest shall be calculated under the regular rate agreed upon conclusion of the loan agreement. The measure shall apply to all payment obligations from loan agreements which have fallen due after 12 March 2020, being the date of official declaration of COVID-19 epidemic in Slovenia.

The provisions of this law shall apply also to loan agreements which are concluded during the validity of the law.

Conditions to achieve moratorium:

1. A borrower must submit to the bank an application for moratorium within 6 months as of official termination of the COVID-19 epidemic in Slovenia.
2. The application shall contain certain mandatory components which differ depending on characteristics of the borrower:

• large companies need to state and reason that they are paying mandatory contributions, taxes and other duties, however, as result of the COVID-19 crisis, continued payments of obligations from the loan agreements could cause liquidity problems in such extent that solvency could be jeopardised;
• other companies, co-operatives, societies, institutes, foundations, physical persons employing workers, self-employed and farmers need to state and reason that they are paying mandatory contributions, taxes and other duties, however, as result of the COVID-19 crisis, they cannot assure continued payments of obligations from the loan agreements;
• all of the above categories need to include in the application also:
  • a description of their business position (including a plan for re-establishing liquidity);
  • a statement that they have no outstanding tax/social contributions obligations as at 31 December 2019 (or that they benefit from a moratorium thereon or have the right to pay them in instalments).

As an exception, the borrowers from the second indent above whose activity has been temporarily barred under COVID-19 related measures (e.g. stores offering non-food products, providers of certain non-urgent services) do not need to provide the description of their business position / plan for re-establishing liquidity, and do not need to provide any reasoning for the moratorium;

• physical persons only need to state and reason that, as result of the COVID-19 crisis, they cannot assure continued payments of obligations from the loan agreements, and provide a description of facts and circumstances related to such crisis which have affected their financial position.

3. Provided that the above conditions are fulfilled, the banks are obliged to approve the described moratorium and conclude appropriate annexes with the borrowers, upon which the moratorium will take legal effect.

If the bank denies approval of a complete and justified application, it may be fined in the range between EUR 80,000 to EUR 250,000, a member of its management board with a fine between EUR 2,500 to EUR 10,000, and its other responsible person with a fine between EUR 800 to 10,000.

Those borrowers, which are obliged to include in their applications a description of their business position, will during the moratorium have certain monthly reporting obligations.

Possibility to terminate:

The bank will be able to terminate the moratorium before its expiry:

• if the borrower (other than a physical person):
  • fails to provide monthly reports;
  • no longer qualifies for the moratorium (e.g. due to improvement of its business situation);
  • provides false information in the application;
  • breaches the prohibition on payment of dividends, rewards for success to the management and the employees, and payment of other financial liabilities to parent and/or affiliated companies or owners;
• if the borrower who is a physical person provides false information in the application.

Prohibition of dividend and other payments:

The commercial companies which will be granted a moratorium on obligations under the loan agreement in accordance with the ZIUOPOK, shall be, for the period from the submission of the application for suspension of the payment obligations to the termination of the bank’s right to exercise the right of surety [see section II.], prohibited from payment of profit, rewards for success to the management and the employees and payment of other financial liabilities to the (direct or indirect) parent companies, affiliated companies or owners. The bank shall include a warning concerning this prohibition in the loan agreement or annex to the loan agreement. A breach of this prohibition is a reason for termination of the moratorium.

II. STATE SURETIES RELATED TO THE ZIUOPOK

The Republic of Slovenia shall act as surety to a bank or savings bank with seat in Slovenia for the performance of the obligations of the borrowers, which were not considered undertakings in difficulty as determined in point 18 of Article 2 of Commission Regulation (EU) No 651/2014, and which are affected by the above discussed moratorium in the amount of:

• 25% of the amount of stayed instalments of the obligations under the loan agreements, which fall due within a period of maximum 12 months, for which the moratorium was agreed; or
• 50% of amount from the preceding indent in the case of borrowers whose activity has been temporarily barred under COVID-19 related measures, and in the case of borrowers which are individuals.

These state sureties will also be subject to the restrictions set out in point 3.2 of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, which will be further specified by a decree of the Government of the Republic of Slovenia.

This benefit can likely not be used by Slovenian branches of banks of EU member states, licensed to perform banking services in Slovenia (but which are obliged to grant the above discussed moratoria).

The respective surety shall apply also to new loan agreements concluded in accordance with the ZIUOPOK for the purpose of assuring liquidity due to COVID-19 epidemic, which shall mandatorily contain also express pari passu and negative pledge provisions, and which shall not contain a cross default clause unless such clause is contained in the borrower’s other loan agreements.

The aggregate sum of such state sureties shall not exceed EUR 200 million.

The SID bank (being the Slovenian export and development bank) will handle the operative tasks on behalf of the Republic of Slovenia.

Enforcement towards the borrower will generally remain the competence of the bank under SID bank’s supervision. The bank will have to notify the borrower on the submitted application for surety within 3 days from submission.

The state surety terminates if:

• the moratorium was granted in contradiction with the provisions of the ZIUOPOK and the breach was on the side of the bank; or
• if the bank fails to inform the SID bank on commencement of insolvency procedure over the borrower at least 14 days before expiry of the deadline for lodging of claims.

Further details concerning enforcement, deadlines, documentation and reporting may be regulated with a decree adopted by the Government.

III. MEASURES ON ENFORCEMENT AND PERSONAL BANKRUPTCY

All payments paid on the basis of the Act on Intervention Measures for Suppression of COVID-19 Epidemic and Mitigation of its Consequences for Citizens and the Economy (ZIUZEOP), except for salary compensations, shall be excluded from enforcement, tax enforcement and personal bankruptcy estate.

As of entering into force of the ZIUZEOP, enforcement and tax enforcement shall be suspended (exception being urgent matters, on which the court renders decisions also during the epidemic, enforcement for alimony and enforcement of damages for lost alimony due to death of alimony provider).

IV. MEASURES RELATED TO INSOLVENCY PROCEEDINGS AND COMPULSORY LIQUIDATION

Additional insolvency situation:

In addition to the regulation of insolvency in the general insolvency legislation, it shall be presumed (and counter evidence shall not be allowed) that a legal person, entrepreneur or a private-employed person has become insolvent also in case of delay with payment of salaries and social contributions to the employees for more than one month as of receipt of reimbursement of salaries and social contributions paid on the basis of the intervention laws which have the purpose of preservation of work posts in the context of COVID-19 epidemic. The insolvency presumption shall continue to apply for four more months as of cessation of the measures under the ZIUZEOP.

Stay on management’s obligation to file for insolvency and prolongation of certain other deadlines:

Regardless of the provisions of the general insolvency legislation the management shall not be obliged to file for commencement of bankruptcy or compulsory settlement proceedings if insolvency is a consequence of the declaration of COVID-19 epidemic. It shall be deemed that this condition is fulfilled if the company performs activity which was temporarily barred or materially limited by the authorities due to COVID-19 epidemic, or if the company was not insolvent on 31 December 2019. This measure shall apply during the declared COVID-19 epidemic and for three more months as of cessation of the measures under the ZIUZEOP, unless there are no prospects that the company will be able to eliminate the insolvency.

If the due to the epidemic the company’s bodies cannot perform certain actions and measures concerning calling of the shareholder’s meeting and recapitalisation in the context of remedying the insolvency, such bodies shall be obliged to start performing such actions at the latest within one month as of cessation of the measures under the ZIUZEOP. Certain other deadlines applicable to the management’s obligations under the general insolvency legislation are also prolonged.

Stay on deciding on creditor’s application to commence bankruptcy proceedings:

Regardless of the provisions of the general insolvency legislation the court will be able to prolong to four months the period for which it can (upon the debtor’s request) stay the deciding on the creditor’s application for commencement of bankruptcy proceedings, if insolvency of the debtor is a consequence of the declaration of COVID-19 epidemic. It shall be deemed that this condition is fulfilled if the debtor performs activity which was temporarily barred or materially limited by the authorities due to COVID-19 epidemic, or if the debtor was not insolvent on 31 December 2019.

The debtor will be able to justify the suspension of the decision on the creditor’s application to commence bankruptcy proceedings also by providing evidence that it has eliminated the insolvency with other financial restructuring measures or with sufficient volume of business.

This measure shall be applied in bankruptcy proceedings initiated at the request of the creditor no later than three months after the termination of the ZIUZEOP measures. On the debtor’s proposal, suspension of the decision on bankruptcy will be followed by suspension of enforcement.

V. CHALLENGES OF IMPLEMENTATION IN PRACTICE

Generally, the discussed regulations are relatively short and do not specifically (or in sufficient detail) address several topics which will need to be considered by the banks in implementation.

Most notable questions include:

• What is the practical reach of applicability of this law to “new” loan agreements concluded during validity its validity, and can this result in a new credit crunch in Slovenia? What will be the practical consequences of the fact that under the Guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis, published by the EBA on 2 April 2020 (hereinafter the “EBA Guidelines”) the moratoria should not apply to new loan agreements?
• What is the effect of this law onto obligations payable to the banks under syndicated facilities which include non-Slovenian lenders / agents?
• What is the effect of this law onto loans secured with state or quasi-state guarantees, where the banks are not allowed to change credit terms?
• What interest rate must be used for calculation of interest rate during the moratorium, if it has been amended in the past (the amendment to the ZIUOPOK provides for the interest rate upon conclusion of the agreement which may be different)? Shall margin ratchets be considered as “interest rate agreed upon the conclusion of the loan agreement”? It seems likely that the banks will interpret the unclear provision in the sense that the latest interest rate used before the moratorium should continue to be used, particularly in the light of the requirement stated in the EBA Guidelines that no loan terms should be changed other than maturity of certain payments.
• How will the moratorium affect credit rating of the borrower; and how should moratoriums be considered in view of prudential requirements applicable to the banks? With the explicit provision that interest should continue to be calculated, the ZIUZEOP seeks to achieve that debtors should not be classified as forborne or non-performing exposures, but not all relevant aspects are covered. Certain features of the mandatory moratoria are clearly not compatible with the criteria set out in the EBA Guidelines.
• How to achieve legal certainty in assessing whether or not the borrower’s application is grounded (particularly in view of the fines and potential termination of the state surety)? How to prevent potential misuse by those clients whose payment ability was problematic even before the epidemic, and did not materially deteriorate as a result of the epidemic?
• Does the law affect only receivables from loans or also receivables from other banking transactions (guarantees, factoring, overdrafts, leasing)? What will be the effect on hedging agreements?
• Are the banks allowed to charge any costs in respect of the annexes to be concluded?

If you need any help in relation to this new Slovenian law, please do not hesitate to contact SELIH & PARTNERJI Law Firm.

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« COVID-19: Intervention Measures to Support the Slovenian Economy » Amendments of the Provisional Measures Concerning Judicial, Administrative and other Public-Law Affairs

Author: Mia Kalas, SELIH & PARTNERJI Law Firm

We have previously reported on the emergency law concerning moratorium on banking loans (Zakon o interventnem ukrepu odloga plačila obveznosti kreditojemalcev, “ZIUOPOK”) and on the amendments and certain additionally adopted measures.

On 28 April 2020, the Slovenian Parliament adopted the Law Amending the Act on Intervention Measures for Suppression of COVID-19 Epidemic and Mitigation of its Consequences for Citizens and the Economy, which includes certain amendments of the sureties for loans, which are subject to the moratorium under the ZIUOPOK, as well as amendments of certain additionally adopted measures concerning enforcement and bankruptcy procedures which are important for creditors and debtors.

The most significant substantive amendments introduce certain additional conditions and restrictions of the validity of state sureties for the borrowers’ obligations suspended under the ZIUOPOK. There are also a few important editorial amendments which eliminate the inconsistencies of the previous wording.

In order to benefit from a summary of all information available so far in one article, please see below an update of the article of 6 April 2020 where the updates are marked in bold and italic.

Measures marked in bold and italic entered into force on 1 May 2020.

I. SUMMARY OF ZIUOPOK (WITH AMENDMENTS)

The ZIUOPOK entered into force on 29 March 2020. The measures imposed thereunder shall be effective for 18 months as of cessation of the reasons for them, which shall be established by a resolution to be adopted by the Slovenian Government.

The ZIUOPOK is applicable to the following lenders:

• banks and savings banks with seat in Slovenia;
• Slovenian branches of banks of EU member states, licensed to perform banking services in Slovenia;

(hereinafter “banks”).

Eligible borrowers include:

• companies with seat in Slovenia;
• co-operatives, societies, institutes, foundations, physical persons employing workers, self-employed persons, all with seat / permanent residence in Slovenia (as applicable);
• farmers;
• physical persons (i.e. consumers) who are Slovenian citizen and have permanent residence in Slovenia

(hereinafter “borrowers”).

General description of the measure:

The bank shall be obliged to grant to the borrower (at its request) a 12-month suspension of all payment obligations and a corresponding prolongation of repayment schedule (including final maturity date). The maturity of security agreement shall also be prolonged. During the moratorium, interest shall be calculated under the regular rate agreed upon conclusion of the loan agreement. The measure shall apply to all payment obligations from loan agreements which have fallen due after 12 March 2020, being the date of official declaration of COVID-19 epidemic in Slovenia.

The provisions of this law shall apply also to loan agreements which are concluded during the validity of the law.

Conditions to achieve moratorium:

1. A borrower must submit to the bank an application for moratorium within 6 months as of official termination of the COVID-19 epidemic in Slovenia.
2. The application shall contain certain mandatory components which differ depending on characteristics of the borrower:

• large companies need to state and reason that they are paying mandatory contributions, taxes and other duties, however, as result of the COVID-19 crisis, continued payments of obligations from the loan agreements could cause liquidity problems in such extent that solvency could be jeopardised;
• other companies, co-operatives, societies, institutes, foundations, physical persons employing workers, self-employed and farmers need to state and reason that they are paying mandatory contributions, taxes and other duties, however, as result of the COVID-19 crisis, they cannot assure continued payments of obligations from the loan agreements;
• all of the above categories need to include in the application also:
  • a description of their business position (including a plan for re-establishing liquidity);
  • a statement that they have no outstanding tax/social contributions obligations as at 31 December 2019 (or that they benefit from a moratorium thereon or have the right to pay them in instalments).

As an exception, the borrowers from the second indent above whose activity has been temporarily barred under COVID-19 related measures (e.g. stores offering non-food products, providers of certain non-urgent services) do not need to provide the description of their business position / plan for re-establishing liquidity, and do not need to provide any reasoning for the moratorium;

• physical persons only need to state and reason that, as result of the COVID-19 crisis, they cannot assure continued payments of obligations from the loan agreements, and provide a description of facts and circumstances related to such crisis which have affected their financial position.

3. Provided that the above conditions are fulfilled, the banks are obliged to approve the described moratorium and conclude appropriate annexes with the borrowers, upon which the moratorium will take legal effect.

If the bank denies approval of a complete and justified application, it may be fined in the range between EUR 80,000 to EUR 250,000, a member of its management board with a fine between EUR 2,500 to EUR 10,000, and its other responsible person with a fine between EUR 800 to 10,000.

Those borrowers, which are obliged to include in their applications a description of their business position, will during the moratorium have certain monthly reporting obligations.

Possibility to terminate:

The bank will be able to terminate the moratorium before its expiry:

• if the borrower (other than a physical person):
  • fails to provide monthly reports;
  • no longer qualifies for the moratorium (e.g. due to improvement of its business situation);
  • provides false information in the application;
  • breaches the prohibition on payment of dividends, rewards for success to the management and the employees, and payment of other financial liabilities to parent and/or affiliated companies or owners;
• if the borrower who is a physical person provides false information in the application.

Prohibition of dividend and other payments:

The commercial companies which will be granted a moratorium on obligations under the loan agreement in accordance with the ZIUOPOK, shall be, for the period from the submission of the application for suspension of the payment obligations to the termination of the bank’s right to exercise the right of surety [see section II.], prohibited from payment of profit, rewards for success to the management and the employees and payment of other financial liabilities to the (direct or indirect) parent companies, affiliated companies or owners. The bank shall include a warning concerning this prohibition in the loan agreement or annex to the loan agreement. A breach of this prohibition is a reason for termination of the moratorium.

II. STATE SURETIES RELATED TO THE ZIUOPOK

The Republic of Slovenia shall act as surety to a bank or savings bank with seat in Slovenia for the performance of the obligations of the borrowers, which were not considered undertakings in difficulty as determined in point 18 of Article 2 of Commission Regulation (EU) No 651/2014, and which are affected by the above discussed moratorium in the amount of:

• 25% of the amount of stayed instalments of the obligations under the loan agreements, which fall due within a period of maximum 12 months, for which the moratorium was agreed; or
• 50% of amount from the preceding indent in the case of borrowers whose activity has been temporarily barred under COVID-19 related measures, and in the case of borrowers which are individuals.

These state sureties will also be subject to the restrictions set out in point 3.2 of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, which will be further specified by a decree of the Government of the Republic of Slovenia.

This benefit can likely not be used by Slovenian branches of banks of EU member states, licensed to perform banking services in Slovenia (but which are obliged to grant the above discussed moratoria).

The respective surety shall apply also to new loan agreements concluded in accordance with the ZIUOPOK for the purpose of assuring liquidity due to COVID-19 epidemic, which shall mandatorily contain also express pari passu and negative pledge provisions, and which shall not contain a cross default clause unless such clause is contained in the borrower’s other loan agreements.

The aggregate sum of such state sureties shall not exceed EUR 200 million.

The SID bank (being the Slovenian export and development bank) will handle the operative tasks on behalf of the Republic of Slovenia.

Enforcement towards the borrower will generally remain the competence of the bank under SID bank’s supervision. The bank will have to notify the borrower on the submitted application for surety within 3 days from submission.

The state surety terminates if:

• the moratorium was granted in contradiction with the provisions of the ZIUOPOK and the breach was on the side of the bank; or
• if the bank fails to inform the SID bank on commencement of insolvency procedure over the borrower at least 14 days before expiry of the deadline for lodging of claims.

Further details concerning enforcement, deadlines, documentation and reporting may be regulated with a decree adopted by the Government.

III. MEASURES ON ENFORCEMENT AND PERSONAL BANKRUPTCY

All payments paid on the basis of the Act on Intervention Measures for Suppression of COVID-19 Epidemic and Mitigation of its Consequences for Citizens and the Economy (ZIUZEOP), except for salary compensations, shall be excluded from enforcement, tax enforcement and personal bankruptcy estate.

As of entering into force of the ZIUZEOP, enforcement and tax enforcement shall be suspended (exception being urgent matters, on which the court renders decisions also during the epidemic, enforcement for alimony and enforcement of damages for lost alimony due to death of alimony provider).

IV. MEASURES RELATED TO INSOLVENCY PROCEEDINGS AND COMPULSORY LIQUIDATION

Additional insolvency situation:

In addition to the regulation of insolvency in the general insolvency legislation, it shall be presumed (and counter evidence shall not be allowed) that a legal person, entrepreneur or a private-employed person has become insolvent also in case of delay with payment of salaries and social contributions to the employees for more than one month as of receipt of reimbursement of salaries and social contributions paid on the basis of the intervention laws which have the purpose of preservation of work posts in the context of COVID-19 epidemic. The insolvency presumption shall continue to apply for four more months as of cessation of the measures under the ZIUZEOP.

Stay on management’s obligation to file for insolvency and prolongation of certain other deadlines:

Regardless of the provisions of the general insolvency legislation the management shall not be obliged to file for commencement of bankruptcy or compulsory settlement proceedings if insolvency is a consequence of the declaration of COVID-19 epidemic. It shall be deemed that this condition is fulfilled if the company performs activity which was temporarily barred or materially limited by the authorities due to COVID-19 epidemic, or if the company was not insolvent on 31 December 2019. This measure shall apply during the declared COVID-19 epidemic and for three more months as of cessation of the measures under the ZIUZEOP, unless there are no prospects that the company will be able to eliminate the insolvency.

If the due to the epidemic the company’s bodies cannot perform certain actions and measures concerning calling of the shareholder’s meeting and recapitalisation in the context of remedying the insolvency, such bodies shall be obliged to start performing such actions at the latest within one month as of cessation of the measures under the ZIUZEOP. Certain other deadlines applicable to the management’s obligations under the general insolvency legislation are also prolonged.

Stay on deciding on creditor’s application to commence bankruptcy proceedings:

Regardless of the provisions of the general insolvency legislation the court will be able to prolong to four months the period for which it can (upon the debtor’s request) stay the deciding on the creditor’s application for commencement of bankruptcy proceedings, if insolvency of the debtor is a consequence of the declaration of COVID-19 epidemic. It shall be deemed that this condition is fulfilled if the debtor performs activity which was temporarily barred or materially limited by the authorities due to COVID-19 epidemic, or if the debtor was not insolvent on 31 December 2019.

The debtor will be able to justify the suspension of the decision on the creditor’s application to commence bankruptcy proceedings also by providing evidence that it has eliminated the insolvency with other financial restructuring measures or with sufficient volume of business.

This measure shall be applied in bankruptcy proceedings initiated at the request of the creditor no later than three months after the termination of the ZIUZEOP measures. On the debtor’s proposal, suspension of the decision on bankruptcy will be followed by suspension of enforcement.

V. CHALLENGES OF IMPLEMENTATION IN PRACTICE

Generally, the discussed regulations are relatively short and do not specifically (or in sufficient detail) address several topics which will need to be considered by the banks in implementation.

Most notable questions include:

• What is the practical reach of applicability of this law to “new” loan agreements concluded during validity its validity, and can this result in a new credit crunch in Slovenia? What will be the practical consequences of the fact that under the Guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis, published by the EBA on 2 April 2020 (hereinafter the “EBA Guidelines”) the moratoria should not apply to new loan agreements?
• What is the effect of this law onto obligations payable to the banks under syndicated facilities which include non-Slovenian lenders / agents?
• What is the effect of this law onto loans secured with state or quasi-state guarantees, where the banks are not allowed to change credit terms?
• What interest rate must be used for calculation of interest rate during the moratorium, if it has been amended in the past (the amendment to the ZIUOPOK provides for the interest rate upon conclusion of the agreement which may be different)? Shall margin ratchets be considered as “interest rate agreed upon the conclusion of the loan agreement”? It seems likely that the banks will interpret the unclear provision in the sense that the latest interest rate used before the moratorium should continue to be used, particularly in the light of the requirement stated in the EBA Guidelines that no loan terms should be changed other than maturity of certain payments.
• How will the moratorium affect credit rating of the borrower; and how should moratoriums be considered in view of prudential requirements applicable to the banks? With the explicit provision that interest should continue to be calculated, the ZIUZEOP seeks to achieve that debtors should not be classified as forborne or non-performing exposures, but not all relevant aspects are covered. Certain features of the mandatory moratoria are clearly not compatible with the criteria set out in the EBA Guidelines.
• How to achieve legal certainty in assessing whether or not the borrower’s application is grounded (particularly in view of the fines and potential termination of the state surety)? How to prevent potential misuse by those clients whose payment ability was problematic even before the epidemic, and did not materially deteriorate as a result of the epidemic?
• Does the law affect only receivables from loans or also receivables from other banking transactions (guarantees, factoring, overdrafts, leasing)? What will be the effect on hedging agreements?
• Are the banks allowed to charge any costs in respect of the annexes to be concluded?

If you need any help in relation to this new Slovenian law, please do not hesitate to contact SELIH & PARTNERJI Law Firm.