The European Commission has invited comments on State aid proposals regarding rescue and restructuring aid for non-financial institutions in difficulty.

Rescue aid is a temporary measure used to keep ailing firms afloat while a remedial plan is devised. Restructuring aid follows the adoption of a restructuring plan and is designed to enable a firm return to long-term viability without further State support. Rescue aid is repayable in the absence of a restructuring plan. To mitigate potential harm to competition from both forms of aid, strict conditions are attached to the granting of State aid in the proposals.

The proposals are intended to update guidelines adopted in 2004 and form part of the Commission’s State aid modernisation programme. Their aim is to simplify the rules applicable to State aid and to ensure that aid is better used in the public interest, while recognising the current difficulties facing non-financial firms and the importance of preserving jobs and know-how. Separate rules apply to banks and other financial institutions.

The main elements of the proposals are:

• Introduction of temporary restructuring support measures, such as loans and guarantees, designed to simplify the grant of State aid for restructuring SMEs in difficulty, while reducing distortions of competition
• Measures to ensure aid is better targeted at projects in the public interest, for example, the granting of rescue and restructuring aid in regions of high unemployment, or where invaluable expertise could be lost
• Measures designed to impose reasonable burden sharing on the undertaking’s investors, for example, a requirement that investors match the amount of State aid provided
• Clarifying when an entity will be considered “in difficulty” and thus eligible for aid
• Special provisions aimed at ensuring the continuity of services of general economic interest, for example, national postal services

The Commission has invited comments by 31 December 2013, and intends to adopt the new guidelines in the first half of 2014.

Contributed by Morgan Crowe, Claire Waterson.

Back to Legal News