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4.6.1 Grant of a New Loan

Restructuring could also involve the grant of a new loan, thereby enabling overdue outstanding debts to be paid. The new loan will mean that it is necessary to conclude a new loan agreement and reconstitute all of the securities ex novo (including the mortgage).

The borrower will therefore have to bear all of the costs (including taxes) relating to the redemption of the existing loan, as well as those relating to the granting of the new loan. Depending upon the legislative arrangements the bank's guarantee may be weakened since, firstly, the period of time necessary in order to constitute and/or consolidate the mortgage will re-commence and, secondly, it will be open to a new risk of revocation, since both the establishment of the new mortgage as well as the payment redeeming the previous loan may be revoked.

4.6.2 Deferral of Payment Deadlines

A deferral replaces the overdue time limit with a new time limit. A distinction is drawn between a deferral and a respite period: in the latter case the borrower only ceases to be in arrears with payments after it has complied with the obligation within the deferred time limit.

In other words, the respite period implies a situation in which a time limit is replaced only if the performance occurs before expiry of the new time limit set by the lender. This means that a deferral involves the replacement of the overdue time limit with a new one, with the result that the borrower is no longer in arrears (and does not pay the default interest). During a respite period on the other hand, the status of the loan as being in arrears continues until obligations are honoured upon conclusion of the respite period. In both cases the bank stops demanding the repayment of the loan and does not enforce the guarantees, signing a “standstill agreement" with the borrower.

 
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