Financial and credit institutions united under the Association of Lithuanian Banks (LBA), contributing to the assistance of COVID-19 affected business in the country, on 23th April 2020 have signed a temporary payment moratorium for legal entities.
The moratorium is announced by the following institutions: AS Citadele banka Lithuanian branch, Danske Bank A/S Lithuanian branch, LKU group, Luminor Bank AS Lithuanian branch, UAB Medicinos bankas, OP Corporate Bank plc Lithuanian branch, UAB "OP Finance", AB SEB bankas, Swedbank AB, AB Šiaulių bankas.
Signing a broad private moratorium, the members of LBA undertake to postpone loan payments to companies for up to 6 months, without changing contract terms and interest rates. The moratorium applies to business loans of up to EUR 5 million per group of companies.
The client subject to the postponement under this moratorium must meet the following criteria:
- it shall not have had significant (more than once and for more than 30 days) delays in the fulfilment of obligations to the financial institutions for the past one year prior to the announcement of the COVID-19 quarantine by the Government of the Republic of Lithuania. At the same time, the credit institution has the right, but not the obligation, to check the client's delays in fulfilling its obligations to other creditors;
- it shall not be declared insolvent and shall not have been subject to reorganization measures;
- equity capital of the legal entity (when applicable to a particular type of legal entity) for the financial year of 2019 is positive;
- it must indicate the COVID-19 pandemic related cause for the deterioration of the financial situation.
The credit institution may request for additional information evidencing the impact of the COVID-19 pandemic on the client's ability to meet its obligations and meet the criteria of the moratorium.
The client which has used the postponement of the repayment of loan which was granted by the credit institution under this moratorium shall not make any payments to its shareholder, stakeholder, the owner(s) and/ or persons related to them (including, but not limited to, dividend payments, repayments or grants of loans), for the period of postponement and for 6 months after the end of the postponement period, without the consent of the credit institution which granted the postponement.
During the postponement period, the credit institution will temporarily suspend the application of the contractual financial ratios and other financial covenants imposed on the client (including, but not limited to, debt (service) coverage ratio (DSCR), positive equity, DEBT / EBITDA ratio, and/or other).
This moratorium shall not apply to credit agreements without a fixed repayment schedule (including, credit line/limit, account overdraft limit, which does not have an obligatory decreasing utilization limit).
The moratorium comes into power on April 24, 2020 and will remain in power until July 1, 2020.