There comes ‘cut-off’ of loans guaranteed to the public with no impact on the debtor

Happy news for debtors with the guarantee of Greek brings the new bill that was given in consultation by the Ministry of Finance on 31 March. The new provision allows banks and servicers to make arrangements for these loans under State guarantee, while maintaining the right to state guarantees, while giving a way out of the issue of debt write-off in the context of an extrajudicial compromise. In the case of an amount of remission provided for in the Staff Regulations, this may be requested by creditors at the expense of the State, which repays it without seeking it at the expense of the beneficiary natural person. The current ones were that the State pays the bank or servicer, but then through taxation it “charges” the debtor in compliance with all the planned procedures that could even reach an auction of property. This changes with the new provisions of the Tax Code. In particular, it provides for: Financial institutions are entitled to regulate loans or credits of any kind to natural or legal persons for which they have been guaranteed by the Greek State without limitation in respect of all their general and specific conditions, in particular the duration, the interest rate, the amount of the installment and the periodicity of the instalments. Regardless of the regulation, the above guarantees provided in favour of the financial institutions of the Greek State remain valid as a whole, without a quantitative increase in its guarantee liability. The limitation of the claims of the financial institutions against the Greek State, as a guarantor, as well as the deadline laid down in the relevant ministerial decisions, shall be suspended from the date of final submission of the application referred to in Article 8 until the completion of the application process in any way, as well as for as long as the restructuring contract for which the Greek State guarantee has been granted is in force. Requests for forfeiture already submitted until the date of final submission of the application referred to in Article 8, whether or not they remain valid. Where the procedure is successfully completed and the proposed Restructuring Convention enters into force when it is implemented, the debt may be monitored on a new account in which the characteristics of the arrangement are reflected. If an amount of remission is provided, financial institutions shall be entitled to request the Greek State as guarantor the one-off payment of the guaranteed portion of that amount as a whole, with a request to the competent office of the General Accounting Office of the State, submitted immediately after the entry into force of the Restructuring Convention. The Greek State makes repayment of its obligations as guarantor of the amount of the principal debt which is fully deducted, without the confirmation of this amount, as an income of the Greek State, against the natural person, to the competent Public Economic Service and by proportional application of the procedure of c.b, c, and d.6 of Article 101 of Law 4549/2018 (A’ 105). The termination of the Restructuring Convention for any reason provided for in the present, in the current ministerial decisions relating to the extrajudicial mechanism, as well as the Restructuring Convention and its Annexes, which results in the loss of the regulation for the complainant financial institution, on loans or credits guaranteed by the Greek State, implies the revival of this debt to the amount it had before the Restructuring Convention, which becomes fully due and directly payable, deducted amounts paid in the meantime under that arrangement, as well as by the Greek State as guarantor. The financial institution is entitled to submit to the Greek State a request for a down payment for the guaranteed balance of the debt as set out above after the revival. The above applies also to loans guaranteed by the Greek State to natural persons or groups of natural persons, by way of derogation from the provisions for the submission of down payment claims, per instalment, in accordance with the relevant ministerial decisions granting the guarantee, the termination of the Restructuring Convention, which also constitutes a termination of the regulated contract. For debt from loans or credits guaranteed by the Greek State, the application of Article 8 is also submitted and the Restructuring Convention is mandatory by all parties involved (feelers, co-debtors, guarantors other than the Greek State). “