BRIDGE 2: Possibility for “haircuts” to loans for interest and capital

The new favorable regulations in the framework of the BRIDGE 2 Program, for the benefit of small and medium enterprises, were announced by the Minister of Finance, Mr. Christos Staikouras.

"After extensive consultations of the Special Secretariat for Private Debt Management with the competent European institutions, the Ministry of Finance succeeded in integrating a series of new favorable measures in the "BRIDGE 2" Program. Measures are particularly beneficial for small and medium-sized enterprises affected by the coronavirus pandemic, as it is now possible to write off debt ("cut" interest and capital), reduce interest rates, maintain a pre-agreed installment and extend the repayment period.
"These are measures that are activated for the first time in Greece, and are for the benefit of small and medium enterprises and for the maintenance of their business activity, thus ensuring the development of the Greek economy," he said in a statement.

In particular, under the "BRIDGE 2" program, creditors must take the following steps for the benefit of small and medium-sized enterprises:
A. In case of non-performing loan arrangement:

1. Provide a reduction of the adjustment rate, by at least 10%, compared to the interest rate applicable before the loan restructuring, for a period of 8 months (ie as long as the subsidy lasts) and2. provide one or more of the following:
a. reduction of the adjustment rate, for the entire duration of the repayment arrangement, and / or
b. write-off of default interest and off-balance sheet interest, and / or
c. write-off of a percentage of capital (provided that certain criteria are met, such as that the debt is greater than the commercial value of the debtor, co-debtors and guarantors, there is no...