IN PRACTICE Jones Day has 2,400 lawyers in 37 offjces around the globe, and is one of the world’s largest, most geographically diverse law fjrms. We are long-standing advisers to around half of the Fortune 500, the Fortune Global 500 and the FT Global 500, and our lawyers have extensive experience of working across disciplines, sectors and national boundaries. Our Business Restructuring & Reorganisation team is one of the leading practices in the world, and our insolvency lawyers are intimately involved in various global workout transactions and multijurisdictional reorganisation and bankruptcy proceedings. With a presence in every major commercial centre worldwide, we can readily deploy the skills and resources required to promote or safeguard our clients' interests in cross-border insolvency or restructuring proceedings. In Practice Author Matt Evans I’m about to go insolvent and I’m not a bank – can and will the government bail me out? KEY POINTS � Rescue and restructuring aid is the only state aid option for fjrms in or close to applications fmooding in from member insolvency. states, the vast majority of which � Aid recipients must downsize or otherwise sufger some pain in return for the aid. related to aid for the banking sector, the � Special rules apply to banks, everyone else subject to the same rules since 2004. Commission issued new guidelines as � If you are not a bank or building society, UK government is in general reluctant to how it would apply the state aid rules to help. during the fjnancial crisis. Chief among these were a temporary framework for Tie fjnancial crisis following the “any aid granted by a Member State state aid measures to support access to collapse of Lehman Brothers or through State resources in any fjnance during the fjnancial economic crisis and the subsequent sluggish European form whatsoever which distorts or (Temporary Framework) and a range of economy has thrown a spotlight threatens to distort competition by new guidance on the application of state on European Union (EU) state aid favouring certain undertakings or the aid rules to measures to support banks. rules and, in particular, in what production of certain goods, insofar Excluding the fjnancial sector, circumstances governments can and will as it affects trade between Member however, it is important to note that intervene to support a fjrm in diffjculty. States.” if a fjrm is “in diffjculty” it will not be Tiis feature looks beyond the banking eligible for state aid under the block sector and provides an overview of the Member states (not the aid exemptions listed above. In fact, of the rules governing state aid to all other benefjciary) must notify the proposed myriad frameworks setting out the legal fjrms in diffjculty, fmags some recent state aid to the European Commission bases upon which the Commission state aid measures by the UK and (Commission), and await a clearance will approve state aid, only one can be considers what the future may hold in decision before granting the aid. Tiis is used for aid to fjrms in diffjculty. Tiis terms of state aid support for fjrms in known as the “standstill obligation”. Tie exception is rescue and restructuring diffjculty. standstill obligation applies to all aid aid (Community guidelines on State aid unless it: for rescuing and restructuring fjrms in State aid – the baSicS � falls within the terms of the General diffjculty). Tie rules governing the provision of Block Exemption Regulation; � ReScue and ReStRuctuRing aid – state aid form an important limb of is of a small amount falling within the pRincipleS EU competition policy and go to the the scope of the Commission’s De heart of the goal of providing a single Minimis Regulation; or Outside the banking sector, the legal � market across the Union. Tie aim, in is awarded pursuant to an aid framework governing the award a nutshell, is to protect competition scheme which has received prior of state aid to fjrms experiencing between fjrms across the Union and Commission clearance. fjnancial diffjculties has not changed prevent subsidy races between member since 2004. Tie Commission has states, an efgect of which can be not only In the months following the onset twice consulted third parties as to to waste public resources, but to protect of the fjnancial crisis, the Commission whether to amend the rescue and ineffjcient companies at the expense of showed itself to be fmexible in applying restructuring aid guidelines – fjrst their competitors. its state aid approval procedures. in autumn 2007 and more recently State aid comes in many forms, most In addition to taking the pragmatic in December 2010 – but to date has typically as a capital grant, a soft loan or a step of allocating more stafg within chosen to leave them unchanged. At loan guarantee. It is defjned at Art 107(1) DG Competition (the part of the the beginning of October 2012, the of the Treaty on the Functioning of the Commission responsible for competition Commission decided to extend the European Union as: law enforcement) to process state aid 2004 guidelines indefjnitely pending 231 Corporate Rescue and Insolvency December 2012
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