Advice for budding entrepreneurs: how to get out of debt

If entrepreneurs are having business problems and development of the company had loans taken out can spoil the relationship with the Bank. Not to bring the case to courts, it is better to use the Law 1414-VIII “financial restructuring”, which entered into force in autumn 2016 and will soon earn. The nuances figured out managing partner at Pravovest Gleb Segida.

The BASICS. In December, the debt on loans amounted to 786 billion! While the Bank believes that the outstanding quarter these loans, and according to the experts — problem can be called half of business loans. “The new law will allow banks, as lenders, and legal entities-entrepreneurs as borrowers to negotiate the restructuring legally, because the document will be valid for three years. For this purpose, the Secretariat and the Arbitration Committee as an independent regulatory agencies procedures. And at the time of the negotiations of the parties from 90 to 180 days will be imposed a moratorium on the payment/accrual of interest and penalties on the loan and the sale of the assets of the debtor,” — says the Segid. To restructure the loans can be by writing off part of the debt; change the currency of the loan; changes the term of the debt and the value of payments; a reduction or cancellation of accrued interest on the debt; the borrower of the new debt financing, with the transfer of previously pledged assets as collateral to the new lender; the transfer of the collateral or other property of the debtor in property of the Bank; the conversion of debt into capital of the debtor; business reorganization (merger, joining, splitting), the change of leadership of the company. “In the process of restructuring can involve not only finkompany, but also physical persons-creditors. Law on restructuring are not company initiated bankruptcy proceedings, and firms where owners are associated with the lender of the person”, — says the Segid.

PROCESSES. To start restructuring the borrower shall submit to the Secretariat a statement. “Attached is a consent of the lender to restructure: it must give the holders of not less than 50% of the debts of the borrower. If the application meets the requirements of law on the following day, the Secretariat shall take the decision on the beginning of finestructure. The Secretariat sends creditors a message with the date of the first charges in the case — they take place in 7-10 working days after the start of restructuring,” says the Segid. Further, in up to 7 working days before harvesting, the borrower shall provide the lenders information about current debts, the rationale for restructuring and the Outlook on the financial indices of the business for the year. “After the start of restructuring, a moratorium of 90 days, at the same rate it can be prolonged. If after six months the parties did not come to a compromise procedure is terminated. Possible disputes are resolved in Arbitration, without the involvement of the court, which is a quick procedure. But the Arbitration award is final and cannot be challenged in court,” explains the Segid.