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A Tax International

What are the deferred payment options for borrowers under intervention law?

Updated: Nov 19, 2021



On March 18th, 2020, the Government of the Republic of Slovenia (hereinafter RS) and National Assembly of the RS adopted the Intervention Measure Act on Deferred Payments of Borrowers' Obligations (hereinafter Act). The Act shall enter into force the day after it will be published in Official Gazette of the RS and it shall expire 18 months after the end of epidemic is confirmed. Below, we present who the Act refers to and what your options are for exercising your rights.


The Act defines:

  • Deferral of payments defined in loan agreement for borrowers facing difficulties conducting business due to coronavirus epidemic for a period of 12 months after this Act enters into force.

  • Obligations for borrowers benefiting from deferral.

  • Supervisory Authority for supervision of implementations of the provisions of the Act.


Pursuant to the aforementioned Act, a bank or savings bank (domiciled in the Republic of Slovenia) or a branch of a bank of a Member State established in the Republic of Slovenia (hereinafter referred to as "the Bank") may grant a borrower a deferred payment of a loan contract for a period of 12 months (Note: the Bank and the borrower may also agree on a more favourable term).


Payment deferral may be granted to those who apply for it, provided that all the conditions set out below are fulfilled, and only for credit agreement obligations that have not yet been paid by the time the epidemic is declared (i.e. by 12.3.2020).


Borrowers addressed in the Act that can apply for deferral of payments are:

  • Companies, established under the Companies Act, with registered seat in RS;

  • Institutes under Institutes Act;

  • Natural person employing workers under Employment Relationships Act or self-employed person with seat or permanent residence in RS;

  • Farmers under Agriculture Act.


Procedure for granting a deferral begins with the submission of an application for deferment of the payment with the Bank. Application needs to be submitted no later than six months after cancellation of epidemic (Act will be valid for 18 months from cancellation of epidemic).


Necessary attachments to the application:


1. Company (which in accordance with Companies Act is classified as large company) must:


a) Establish and justify that it pays contributions, taxes and other duties, but that, for business reasons related to the effects of the virus, it cannot guarantee the repayment of its obligations under the credit agreement with the Bank, as such repayment could cause liquidity problems to the extent that the solvency of the company would be jeopardized;*


b) For the purpose of prior submit a description of the business situation due to the effects of the virus and;


c) Submit a statement that, as of December 31, 2019, it has all settled outstanding obligations arising from compulsory contributions, taxes and other charges.


2. Company (which in accordance with Companies Act is a “micro, small or medium sized company”), institute, a natural person who employs workers in accordance with Employment Relationships Act, self-employed person or farmer must:


a) Establish and justify that it pays compulsory contributions, taxes and other public charges, but that, for business reasons related to the effects of the virus, it cannot guarantee the repayment of obligations under a credit agreement with the Bank;


b) For the purpose of the foregoing, it must provide a description of the business situation due to the effects of the virus;*


c) Submit a statement that, as of December 31, 2019, it has all settled outstanding obligations arising from compulsory contributions, taxes and other charges;


d) There is no need to show that repayment could create liquidity problems and jeopardize solvency;


e) The borrowers referred to in this point do not have to enclose a description of their business position and provide justification insofar as they carry out an activity for which a government or municipal decree stipulates that the provision of services or the sale of goods should be temporarily banned. In this case, the application shall state a government or municipal ordinance affecting the performance of its activity.


*Description of business situation must contain:

  • Stated causes together with evidences proving substantially smaller scope of work of the borrower due to corona virus epidemic, which caused liquidity issues that could possibly result in insolvency of the borrower (for large companies) or that prevent borrower from paying obligations according to the credit agreement with the Bank (for borrowers/applicants described under point No.2);

  • Business plan on liquidity management measures;

  • Management's assessment of job retention options.


Borrower, whom deferral was granted is liable to report its business situation to the Bank once per month. The Bank can withdraw from or shorten deferral period, if:

  • Borrower is not reporting its business situation to the [MKS1] Bank, or

  • Condition of the borrower improves, so that justification conditions are not met anymore, or

  • It is found that borrower cited false information in application.


Characteristics of deferred payment:

  • Suspension of maturity of all obligations under the credit agreement until the end of the deferral period;

  • The end date of the credit agreement is extended for the duration of the deferral;

  • Upon expiry of the deferral period, the next instalment is due in accordance with the provisions of the credit agreement;

  • Deferral of the payment does not affect the calculation of the amount of each instalment in accordance with the credit agreement.


Penalties:

  • A fine of EUR 80,000 to EUR 500,000 shall be imposed on the Bank which, without a good cause, does not authorize the borrower to defer payment of the obligations arising from the credit agreement;

  • A fine may also be imposed on the member of the Management Board and the responsible person of the Bank;

  • A fine between EUR 2,500 and EUR 20,000 shall be imposed on the borrower - a company which is a 'micro or small enterprise' and a cooperative, a natural person who employs workers, a farm operator or a self-employed person if it gives false information to the description of the business situation (medium and large companies with a fine of EUR 25,000 to EUR 250,000);

  • The responsible person of the borrower shall be fined between EUR 400 and EUR 5,000 for the offense referred to in the previous paragraph.


We suggest you contact your Bank and agree new conditions for following loan instalments. In case you have additional questions, or you need an additional explanation of the Act itself, feel free to contact our team of advisors.



This document (and all information accessed through the links in this document) is for informational purposes only and cannot be considered as legal advice. The facts stated therein may have changed since the date of publication. You should seek legal advice before taking any possible action.

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