1.  Description of the legislation
    1.  Is there a moratorium on loans legislation implemented in your jurisdiction?
    2. If no: Are there any ongoing discussions regarding a potential introduction of such measures?
    3.  What is the name of the relevant legislation (the “Relevant Act”)?
    4. What is the duration of the measures (period of moratorium)?
    5. Does the legislation provide for an extension of the period of moratorium?
    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?
  2. Parties and agreements affected by the Relevant Act
    1. Is the moratorium available for both corporate and consumer loans?
    2. Who are the affected Lenders?
    3.  Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?
  3. Impact on the loan agreements
    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)?
    2.  Does the moratorium apply to principal only, or also to interest and/or fees?
    3. Will the maturity of the loan automatically be extended by the moratorium period?
    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?
    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)?

jurisdiction

Chile
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1. Description of the legislation

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

No.

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”)?

No Act or Law has been issued to implement a moratorium on loans. However, since 23 March 2020, the Commission for the Financial Market (CMF), which is a public entity that supervises, regulates and control banks and their activities, has issued and applied transitory regulatory exceptions to defer the payment of instalments associated with mortgage, commercial and consumer loans. These exceptions allow borrowers to reschedule instalments to dates after their original maturity, without being treated by bank regulation as a renegotiation of the respective loan. These benefits are granted only to debtors that contract mortgages, commercial and consumer loans with banks, cooperatives or mortgage loan servicers and that have repaid all the instalments as of the date of the respective reschedule. This benefit does not apply to types of loans other than those noted above or to credits that have been contracted with non-regulated lenders. Therefore, borrowers of private loans will not benefit from this measure.

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

It depends on the nature of the loan:

  • mortgage loans – the maximum period of grace or extension will be 6 months 
  • commercial loans – the maximum period of moratorium will be 4 months
  • consumer loans – the maximum period of grace or extension will be 3 months.

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

No extension of the aforementioned moratoriums has been discussed. 

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 moratorium is not mandatory. The benefit must be expressly requested by the borrowers and cannot be unilaterally imposed by banks. If a borrower does not opt into these measures, the original schedule to repay the instalments will apply.

2. Parties and agreements affected by the Relevant Act

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

It applies to any borrower that has contracted a mortgage, commercial or consumer loan with the aforementioned entities. 

2.2 Who are the affected Lenders?

Any lender that is a bank, cooperative or mortgage loan servicer and that is supervised by CMF.

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

If the foreign entity has an agency in Chile and it is supervised by CMF as a bank, cooperative or a mortgage loan servicer, then the moratorium will be applied.  

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)?

This benefit applies only if a borrower has paid at least one instalment. Therefore, only those borrowers who signed the loan documentation before March 2020 can benefit from these measures. 

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

It applies to principal, interest payments and fees. Borrowers must pay all the premiums of the insurances that relate to the respective loans.

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

The maturity of the respective instalments will be extended, but not the maturity of the loan as a whole. Certain banks have postponed the repayment of the respective instalments until the end of the loan, while other entities have divided the postponed instalments and will include them in future instalments. 

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. It is required that the borrower has repaid all previous instalments and that non-payable capital, interest or fees are due.

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)?

Events of defaults have not been addressed by CMF. Therefore, if any company does not comply with any covenant (including financial ratios), the lender will be entitled to terminate the loan agreement and accelerate the repayment.