Deferral of bank loans and enforcement measures: coronavirus cannot be used as a pretext

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During the reprieve period, which now runs until June 17, no company can be declared bankrupt at the request of a creditor. No foreclosure can be made, and banks are prohibited from unilaterally denouncing loans to businesses. However, this should not be an alibi to “forget” to carry out contractual obligations…

For some companies, june 2020 is just the beginning of the crisis… Fragile by two and a half months of containment, the cash reserve, as far as it exists, has been undermined: for many, the cost limitation will not have been sufficient to cope with the sometimes total absence of revenue.

We all know measures that the Belgian government has taken to try to alleviate these difficulties: deferral of certain tax and social debts, recourse to economic unemployment, benefit of the bridge right, deferral of monthly payments to be paid on loans and bank loans, or the possibility of being granted a supplementary credit benefiting from a guarantee (additional) of the Belgian state.

Except for this state guarantee on the credits granted from 1Er last April to September 30, which is intended to apply to all businesses, provided the bank agrees, these measures have in common their ability to only to companies that were not considered to be already “in trouble” government’s actions last March.

What about the situation of companies that were already in a particularly difficult situation even before the outbreak of the Covid-19 crisis in our country?

Ceasefire

On 24 April, the government published the Royal Order No. 15 on the same day, granting all Belgian companies a temporary reprieve, in particular, for enforcement measures that their creditors intended to take against them for default.

In practical terms, this means that during the reprieve period, which now runs until 17 June, no more companies can be declared bankrupt at the request of a creditor. No foreclosure can be made, and banks are prohibited from unilaterally denouncing loans to businesses.



“The bad faith of some debtors is sometimes confusing: not paying your mortgage for 15 months is obviously not attributable to coronavirus…”

Gilles Laguesse

Lawyer Bazacle – Solon

Some companies have seen this “ceasefire” measure as a strong gesture to allow them to breathe, and that is a good thing.

Other companies, such as some individuals who also have a moratorium of several months to pay off their mortgages, have seen in this regulation a real bargain, and an alibi for “Forget“to fulfill their contractual obligations to their creditors. Generally, these companies were already in trouble before the health crisis and the protection measures taken by the government as early as 18 March: they had late payments to the tax authorities, the ONSS, but also to their banks. Before the foreclosure judge, the attitude is sometimes the same and the bad faith of some debtors is sometimes confusing: not paying his mortgage for 15 months is obviously not “attributable to coronavirus”

The banking sector’s effort

The deferral of payment of credit maturities, which must be requested by companies and granted on certain conditions, has a considerable impact on credit institutions. On May 30, Febelfin announced that 118,030 maturity deferrals on mortgages for EUR 12.3 billion. For business loans, there were 130,316 deferrals, for a total of EUR 21 billion. Enough to consider that the effort of the banking sector, at this time, is considerable.

Adding to these deferrals the inability of banks to recover their debts from companies that were already in default before the crisis would have been a too heavy a toll to pay and an unreasonable effort that the government could not afford. The latter had pointed out, “it is not a question of giving debtors a right not to pay“.

This is the reason why the government has foreseen the possibility that companies already in difficulty before the crisis, may be “outings” protection regime, and that banks can continue to collect their debts as expected before the crisis began.

If, in ordinary times, the bank is generally free to denounce or grant a credit or payment plan, during the current period, this time it cannot discretionaryly decide whether or not its debtor benefits from the effects of Royal Order No. 15 granting him a stay. The bank must contact the president of the company’s court beforehand, according to the forms of the referral. To judge that a company is excluded from the protection measures, The presiding judge must take into account all the interests involved, including those of the creditor.

Justice is often criticized – without being responsible – for its slowness, but it has been clear to us that in this regard, for the borough of Brussels, the court of the company is showing efficiency: it takes about 7 days calendar, date of the significance of the citation to the debtor, to obtain a reasoned decision of the presidential chamber excluding a company from the moratorium , allowing the bank to put an early end to unpaid credit contracts.

We know that in this area, speed of action is an essential criterion for creditors. The government understands that. So is the company court. To use the Coronavirus crisis as a pretext is to unfairly put its creditors in difficulty. These creditors without which, most of the time, a business could never have developed or maintained.

All too often we tend to forget it.

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