State aid – review of bill on the granting of state aid for business restructuring
or rescue purposes

 

State aid for business restructuring or rescue purposes

  • Aid may be granted if it prevents or helps reduce a social hardship or overcome a market weakness, provided that without such aid these objectives would be achieved to a lesser degree or not at all.
  • Aid may be granted to undertakings in distress which purchase assets from undertakings that have received the aid before the purchase, provided that ten years have passed from:

the receipt of the aid;

when the restructuring plan implementation was completed;

when the restructuring plan implementation was stopped.

  • Aid may be granted to an undertaking in distress that is a member of a group of companies if the distress:

is internal and has not been caused by unreasonable cost sharing within the group,

is too serious to be resolved by the affected undertaking or by other undertakings from its group.

  • The aid is granted upon written application.

 

Rescue aid

  • Rescue aid may be granted to an undertaking in distress in order to enable it to continue in business for a period necessary to:

develop a restructuring plan,

liquidate the business,

 and to obtain such related research and analysis as may be necessary.

  • Rescue aid takes the form of a loan whose interest rate will be not less than base rate plus 4 p.p. The loan will not be granted without provision of collateral to the minister competent for the economy to secure repayment of the loan. The amount of collateral depends on the kind, liquidity and financial and economic condition of the undertaking in distress that offers the collateral, but should be no less than 50% of the projected aid to be granted.
  • Rescue aid will not exceed the amount necessary to maintain core operating activities of the undertaking, as defined in the Accounting Act, for the duration of the aid but in any case for no longer than 6 months. The aid will be quantified according to a statutory formula.
  • If the result is:

negative, then the loan amount may not be higher than the absolute value of the result, unless the undertaking in distress makes an arguable case in writing that the loan must be higher, in particular by providing financial projections of its cash flow requirements over the period with which the application is concerned;

positive, then the loan amount depends on whether the undertaking in distress is able to make a detailed arguable case that it is indeed in distress and needs the loan in the amount requested, in particular by providing financial projections of its cash flow requirements over the period with which the application is concerned.

 

Interim restructuring support

  • Interim restructuring support is available to a micro-enterprise, small enterprise or medium-sized enterprise if it is in distress or, where it is not in distress, if exceptional and unforeseen circumstances have occurred which make it necessary for the enterprise to obtain urgent liquidity support to enable it to continue in business for the time necessary to implement restructuring measures designed to restore its long-term ability to compete in the market.
  • Interim restructuring support takes the form of a loan.
  • The support will not be granted if the enterprise does not implement a simplified restructuring plan.
  • The amount of the support will not exceed the amount necessary for the enterprise to continue in business for the duration of the support but in any case for no longer than 18 months. If the support directly follows rescue aid, the duration of the rescue aid will be included in the 18 months' period.

 

Restructuring aid

  • Restructuring aid may be granted to an undertaking in distress in order to implement a restructuring plan that will help restore its long-term ability to compete in the market.
  • Restructuring aid may be granted if:

it prevents social hardship or helps overcome a market weakness,

without such aid the undertaking in distress would be restructured, sold or liquidated so that the objective stated in point 1 would be achieved to a lesser degree or not at all,

- a credible scenario analysis is submitted for an alternative scenario involving measures taken as part of the restructuring but not amounting to restructuring aid, to demonstrate that, without the aid, the objective stated in point 1 would be achieved to a lesser degree or not at all.

  • The alternative scenario may be, without limitation, trade sale of the whole or an organised part of the business or sale of its assets as part of restructuring or bankruptcy process.
  • Restructuring aid will not exceed the minimum amount necessary for the undertaking in distress to regain its long-term ability to compete in the market, considering such factors as the amount and form of the aid and the split of burdens.
  • Restructuring aid may involve:

a loan,

- subscription for new shares or additional nominal value of existing shares,

subscription for bonds,

changed repayment terms of a loan from the grantor,

conversion of a loan granted as rescue aid or interim restructuring support into undertaking's equity,

having the enforcement of an administrative fine deferred or its payment spread over time,

having the enforcement of an overdue administrative fine deferred or its payment spread over time,

having an administrative fine waived in whole or in part,

having any default interest waived in whole or in part,

on condition the amount of the aid is used for implementation of the restructuring plan.

 

Doradztwo Podatkowe WTS&SAJA Sp. z o.o. 

Bałtyk Building, 13th floor

ul. Roosevelta 22

60-829 Poznań

tel. (+48) 61 643 45 50

Warsaw Office

Central Tower, 22nd floor

Al. Jerozolimskie 81

02-001 Warszawa

 

Doradztwo Podatkowe WTS&SAJA reserves all copyrights in this content. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions taken in reliance on the above information.

 

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