Law and regulation of Covid-19 loan moratoriums in Belgium

1. Description of the legislation

1.1 Is there a moratorium on loans legislation implemented in your jurisdiction?

Yes.

1.2 If no: Are there any ongoing discussions regarding a potential introduction of such measures?

Not applicable.

1.3 What is the name of the relevant legislation (the “Relevant Act”)?

The moratorium was agreed between the Government, the National Bank of Belgium and Febelfin (the association representing the financial industry), and further described in a “Charter Payment Deferral – mortgage loans” (with the complementary royal decree expected to come out soon) and a “Charter Payment Deferral – enterprises loans”.

1.4 What is the duration of the measures (period of moratorium)?

Until 31 October 2020.

1.5 Does the legislation provide for an extension of the period of moratorium?

Not for the moment.

1.6 Is the moratorium mandatory, or can each borrower opt out should they wish to simply continue payments, or opt in if they want to be protected by the moratorium?

The borrower must opt in and provide evidence that it is eligible for the moratorium, i.e.:

  • be impacted by COVID-19
  • have no pre-existing default, and 
  • not be subject to ongoing restructuring process.

2. Parties and agreements affected by the Relevant Act

2.1 Is the moratorium available for both corporate and consumer loans?

The moratorium is available for corporate loans (excluding factoring/leasing) and to consumer mortgage loans (excluding consumer credits).

2.2 Who are the affected Lenders?

The Charters do not clearly state who the affected lenders are. In our opinion, only the members of Febelfin (being mainly Belgium-based lenders) are impacted. There is no indication that such members could opt out of the moratorium.

2.3 Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?

Foreign lenders (not member of Febelfin) are not affected by the Belgian moratorium for the time being.

The governing law is not a relevant criterion.

3. Impact on the loan agreements

3.1 Is there a cut-off date with respect to loan agreements to which the Relevant Act will apply (e.g. not applicable to loan agreements entered into after the cut-off date)?

All pre-existing loans (entered into before April 2020) are eligible.

New loans (from April 2020) might benefit from a state aid guarantee under conditions.

3.2 Does the moratorium apply to principal only, or also to interest and/or fees?

The moratorium applies to principal only (save for certain mortgage loans).

3.3 Will the maturity of the loan automatically be extended by the moratorium period?

Yes.

3.4 Are repayments and interest which have become due and payable under the contract before the Relevant Act has come into force covered by the moratorium?

No.

3.5 Will lenders be able to terminate a loan due to an event of default other than non-payment (e.g. breach of financial covenants)?

Yes.

Portrait of Benoît Vandervelde
Benoît Vandervelde
Partner
Brussels
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Bruno Duquesne
Partner
Brussels