Stabilisation and restructuring law in Slovenia

Moratorium on loans

On 20 March 2020 Slovenia’s legislature adopted the Intervention Measure Act on Deferred Payments of Borrowers'’ Obligations (Zakon o interventnem ukrepu odloga plačila kreditojemalcev, ZIUOPOK) which enables a moratorium on loan payments (odlog) for a period of 12 months, though banks and borrowers remain free to agree more favorable loan conditions. This measure is not limited to certain industries or types of businesses, but it is limited only to payments which were not due before 12 March 2020 when the epidemic was declared in Slovenia. The request for a moratorium needs to be filed with a bank within six (6) months of Slovenia cancelling the epidemic status at the latest. Lenders affected are banks and savings institutions with their registered seat in Slovenia and banks from other member states with a branch office in Slovenia. The supervisory authority identified in the ZIUOPOK is the Bank of Slovenia.

Moratorium on loans applies to the loans granted by the Slovene Enterprise Fund, Eco Fund – Slovenian Environmental Public Fund (Eko sklad – Slovenski okoljski javni sklad) and other public funds established by Republic of Slovenia pursuant to the Act on Intervention Measures to Mitigate the Effects of the COVID-19 Infectious Disease Epidemic on Citizens and the Economy (Zakon o interventnih ukrepih za zajezitev epidemije COVID-19 in omilitev njenih posledic za državljane in gospodarstvo) as well. Here, however, rules are slightly different (e.g. a moratorium of up to 12 months applies to all payment obligations under a loan agreement).

Measures by SID Bank

SID Bank (the Slovenian development and export bank) has amended and supplemented its existing financial instruments in order to help companies solve liquidity problems, including liquidity in the supply of services and products, problems with reduced demand, shortfall of production, problems in the supply chain and investment problems. 

In addition, SID Bank has prepared: 

• short-term liquidity loans for SMEs and large companies
• loans for working capital for the self-employed, SMEs, large companies and cooperatives involved in the tourism and restaurant sectors
• financing of the purchase of protective equipment, material and services for the purpose of managing the COVID-19 epidemic by health centres and providing guarantees for delivery of protective material and healthcare equipment
• indirect financing via banks and saving institutions to all companies and the self-employed
• loan insurance for advance payment for delivery of respirators, masks and other protective equipment
• amended insurance for loans in relation to export (among other insuring service and payment guarantees), and
•  indirect financing via banks and saving institutions to all companies and the self-employed.

Measures by Slovene Enterprise Fund

The Slovene Enterprise Fund (Slovenski podjetniški sklad) has prepared a guarantee scheme for loans for working capital purposes granted by banks to micro- and small-sized companies up to EUR 100,000 and to medium-sized companies up to EUR 200,000 with subsidised interest rate. 

The Slovene Enterprise Fund is further preparing a new measure in the form of a liquidity loan totalling EUR 25 million that will be available to micro-sized companies, SMEs and cooperatives.

Please see above.

Loan guarantee scheme (based on the Act on Additional Liquidity to the Economy to Mitigate the Effects of the COVID-19 Infectious Disease Epidemic; Zakon o zagotovitvi dodatne likvidnosti gospodarstvu za omilitev posledic epidemije COVID-19):

• Guarantee covers (i) 70% of the principal of a loan, granted to a large company and (ii) 80% of the principal of a loan, granted to micro companies and SMEs.
• The guaranteed loan amount is limited to 10% of the annual turnover in 2019 and twice the annual wage bill for 2019.
• The annual guarantee premiums are set at 25 basis points (“bps”) for micro companies SMEs and 50 bps for large companies for year one; for years two and three, they are set at 50 bps for micro companies and SMEs and 100 bps for large companies; for years four and five, they are set at 100 bps for micro companies and SMEs and 200 bps for larger companies.
• Total fund volume for loan guarantees: EUR 2 billion. - Losses arising out of a loan shall be borne proportionally by a credit institution and Republic of Slovenia.
• With decreasing of the loan, the guarantee shall also proportionally decrease.

Yes

Please specify.

The measures under the (i) Act on Intervention Measures to Mitigate the Effects of the COVID-19 Infectious Disease Epidemic on Citizens and the Economy and (ii) Act on Additional Liquidity to the Economy to Mitigate the Effects of the COVID-19 Infectious Disease Epidemic have been notified and approved by the European Commission.

Moratorium on loans

Loan

The intervention measure only applies the payments which were not due on 12 March when the epidemic was declared in Slovenia.

The moratorium applies to all obligations arising out of a loan agreement except for contractual interests which will still run on the principal amount. 

Request

The request for a moratorium needs to be filed with a bank within six months after Slovenia cancels the epidemic status at the latest. 

Borrower

When a borrower requests a moratorium on credit, it has to:

• submit a description of its (business) situation due to the epidemic and substantiate why it cannot ensure repayment of its obligations towards a bank and 
• submit a statement that all its compulsory contributions, taxes and other charges are settled as of 31 December 2019 or, that on the day of filing of the request for moratorium, payment of these amounts if deferred or may be paid in instalments. 

Companies do not need to provide an explanation of their business situation and include justification if they were ordered by the governmental or municipal order to stop selling goods and/or offering services due to the epidemic, though this exception is not applicable to companies classified as large.

Loan guarantee scheme

• Eligible are companies of any size which: - were not an undertaking in difficulty (UID) on 31 December 2019, and - got into liquidity problems only due to consequences of COVID-19 in Slovenia.
• Applicable to loan agreements executed between 12 March 2020 and 31 December 2020, with maturity of loans up to five years.
• Loans used for financing the main business activity of the borrower financing of new investments or financing of finishing of already started investments, financing of working capital, financing of repayment of obligations under loan agreements, executed between 12 March 2020 and 1 May 2020.
• Purpose of the loan is not financing of affiliated companies or companies with registered seat in other countries.
• On the day applying for a loan, a company must have all its compulsory contributions, taxes and other charges settled or on such day the payment of these amounts is deferred or allowed to be paid in instalments.

Yes.

Please specify.

Moratorium on loans

• One of the prerequisites for granting a moratorium on a loan is that a borrower had paid its compulsory contributions, taxes and other charges on 31 December 2019; some companies may not qualify just for this reason.
• A borrower in crisis before the COVID-19 epidemic would be unlikely to be able to prove that its inability to repay the loan was due to the epidemic. 
• The moratorium measure is applicable only to companies with their registered seat in Slovenia.

Loan guarantee scheme

• A company must not have been an UID on 31 December 2019.
• The scheme is available only to companies with registered seat in Slovenia.

No.

Comments

The measure is applicable only to companies with their registered seat in Slovenia.

Yes.

Please specify.

Moratorium on loans

• The description of a borrower’s (business) situation must include a management plan on liquidity-management measures that a borrower has to follow
• The borrower must report once a month to the bank about engagement in the plan of measures to restore liquidity and other changes to its business position
• If the borrower fails to do so, a bank may terminate or shorten a moratorium period
• Further, borrowers which have been granted a moratorium, are not allowed to distribute any profit, pay out bonuses to employees and management or pay any financial obligations to parent or affiliated companies or owners until a bank has a right to exercize a guarantee provided by the Republic of Slovenia.

Loan guarantee scheme

• Borrowers are not allowed to distribute any profit, pay out bonuses to management, acquire their own shares (treasury shares) or pay any financial obligations to parent or affiliated companies or owners.

Management does not need to file for insolvency proceeding until 31 August 2020 (and possibly even until 30 September 2020) if a company became insolvent due to the COVID-19 epidemic. In this respect, it is presumed that a company’s insolvency is a consequence of the COVID-19 epidemic if (i) the the company’s operations were affected by governmental, ministerial or municipal order stopping or significantly limiting selling of its goods and/or offering services due to the epidemic or (ii) if a company was not insolvent on 31 December 2019. However, the suspension of obligation to file for insolvency is not applicable if there are no prospects for a company to resolve its insolvency.

The following changes have so far been made to insolvency proceedings: 

• New presumption of insolvency: A debtor that is more than one month overdue with the payment of salaries and contributions to employees following the time it received compensations from the state based on the Intervention Act will be presumed to be illiquid and insolvent. The presumption will be in effect until 30 September 2020 (with a possibility to extend until 31 October 2020). 
• If employees file for a bankruptcy based on this new presumption of insolvency, they will not need to pay the advance for costs of a bankruptcy proceeding.
• Suspension of obligation to file for insolvency: The obligation of management to file for insolvency proceedings (bankruptcy or compulsory settlement) will be suspended until 31 August 2020 (and possibly even until 30 September 2020) if a company becomes insolvent due to the COVID-19 epidemic. There is a rebuttable presumptions that a company’s insolvency is a consequence of the COVID-19 epidemic if (i) the company's  operations were affected by governmental, ministerial or municipal order stopping or significantly limiting selling its goods and/or offering services due to the epidemic or (ii) if a company was not insolvent on 31 December 2019. Management, however, has a duty to file for insolvency within a regular deadline if there are no prospects for a company to resolve its insolvency.
• More time for a debtor when a bankruptcy proceeding is proposed by a creditor: When a creditor files for a bankruptcy proceeding over a debtor, the debtor has four (4) months instead of the current two (2) months for financial restructuring to prevent bankruptcy if the company became insolvent due to the COVID-19 epidemic. Again, there are rebuttable presumptions that a company’s insolvency is a consequence of the COVID-19 epidemic if (i) company’s operations were affected by governmental, ministerial or municipal order stopping it or significantly limiting selling of its goods and/or offering services due to the epidemic or (ii) a company was not insolvent on 31 December 2019. This time extension will be applicable to all bankruptcy proceedings filed for by creditors until 31 August 2020 (or in the case of extension of measures, until 31 September 2020). 
• More time for action in compulsory settlement proceedings: Additional time is given to debtors for actions required in compulsory settlement proceedings, specifically for
• Remedy for missed deadline in insolvency proceedings: In insolvency proceedings, no remedies are available for missed deadlines. This has been changed. Now, a court will process and make a decision about a filing/proposal/objection even if a relevant party missed a deadline, but only if: (i) the deadline was missed due to reasons directly related to the epidemic and (ii) the court has not decided on the matter yet.

No.

So far, the Slovenian rules on possible restructuring / insolvency measures have not been amended to take into account the COVID-19 epidemic. Under existing insolvency rules, a court sponsored financial restructuring proceeding (postopek preventivnega prestrukturiranja), a compulsory settlement proceeding (postopek prisilne poravnave) and simplified compulsory settlement proceeding (poenostavljena prisilna poravnava) for micro companies and self-entrepreneurs are available to companies.