CFN tries to recover 665 million dollars; these are the debtors

2024-08-16 13:58:39

The CFN maintains 1,484 coercive proceedings to recover 665 million dollars from debtors. The Tourism Law offers new payment facilities to reduce late payments.

The National Financial Corporation (CFN) maintains 1,484 coercive proceedings to collect 665.2 million dollars, the trials were filed, for the most part, since 2021. Until July 16, 2024, the legal proceedings continue in the judicial system of Ecuador.

The largest amount of CFN’s coercive debt is concentrated in 141 companies y natural personswhich owe between 1 and 42 million dollars each. Together they add up to 509.2 million dollars, between capital and interest. This was detailed by the president of the board of the entity, Ivan Andrade.

The amount owed by large debtors exceeds what was budgeted for public works in all of 2024, which is $379.8 million.

In addition, 984 lawsuits involve amounts of up to $100,000, while debtors owe between $100,000 and $1 million account for 359 lawsuits. Together, they owe $155.5 million.

The process of collecting the CFN’s coercive debt, according to Andrade, may take considerably longer. trials con minor amounts tend to last between 6 and 8 years, while those with higher amounts can last up to 10 or 12 years, he said.

Constant monitoring is essential, Andrade said. “We conduct weekly reviews to ensure that each trial progresses properly and the relevant decisions are taken to advance the recovery of the amounts.”

Since the coercive trials began, Four processes of natural persons were cancelled because the debtors accepted pardons or because they paid the debt. The amount recovered was 7.8 million dollars. Meanwhile, 11 debtors managed to have their lawsuits suspended.

Most of these debts originated between 2012 and 2017. Despite the accounting provisions that reflect a anticipation of possible lossesthe objective remains the full recovery of the amounts owed, he added. Andrade.

List of the largest debtors

Payment facilities to the CFN

A key piece in the fight to recover the CFN’s coercive debt is the Law for the Strengthening of Tourism Activitieseffective from March 2024.

This new regulation offers payment facilities to debtors in coercive proceedings up to $1 million. Previously, the law limited payment solutions to a maximum of two yearsbut now it is allowed to offer longer terms, adjusted to the financial flow of each business.

According to the regulations, this payment facility can be applied only once for a period of up to 20 years, he explained. Livin Armyprofessor at Business School UIDE. This will allow the CFN to pass coercive clients to portfolio productivereducing delinquency.

“What needs to be analyzed is whether these clients will fall back into non-payment, since to reach coercive status they have gone through renewal, refinancing and restructuring, without having complied with them,” he added. Army.

How does CFN work?

These amounts in dispute were delivered when the CFN was a first-tier bankthat is, it delivered the amounts directly to companies or individuals. Today, the National Financial Corporation (CFN) is a bank of second floor. That is, it grants loans through other banks, explained the professor from Business School UIDE. The CFN has had several changes in its structure since it was established.

The institution was born as a first-tier bank in 1964, but in 1992 it became a second-tier bank. In 2005 it became a first-tier bank again and resumed the direct granting of loans, many of which are currently pending collection.

Currently, the CFN operates only as a second-tier bank, with loans granted through institutions in the private financial system. However, the CFN maintains other types of financial products, such as the National Guarantee Fund, which allows clients who wish to access credit from private banks to obtain a guarantee from the CFN. The CFN also has its Trust Business products, explained Armijos.