Aid to and restructuring of companies in difficulty
Aid to and restructuring of companies in difficulty involves the granting of various types of state aid, which may be justified by social, regional or other reasons.
Restructuring procedures for companies and cooperatives in difficulty are carried out in accordance with the Act Governing Rescue and Restructuring Aid for Companies and Cooperatives in Difficulty, which was notified to the Commission of the European Union as a state aid scheme. The procedures in granting such aids are therefore implemented in accordance with the Community Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty.
The objectives of the rescue and restructuring of companies and cooperatives in difficulty are:
- transparency, proficiency and professionalism of management procedures,
- rationality of the system due to limited public financial resources and consequent selectivity of selection on the basis of objective professional criteria, and
- higher efficiency of the system – increasing the share of companies that restore their market viability through state aid.
The process of granting state aid for rescuing and restructuring companies in difficulty has a very specific role within the general system of state aid in Slovenia and indeed the European Union. It may, for example, be justified by social or regional political reasons, the need to take into account the strategic role of individual economic operators in the national economy, or, in an exceptional case, the desire to maintain a competitive market structure when the disappearance of companies or cooperatives could lead to a monopolistic or a harmful oligopolistic situation. On the other hand, it would not be justified to artificially keep alive economic operators in a sector with long-term structural overcapacity, or if they can only survive through repeated state interventions.
Activities for rescuing and restructuring companies
The Ministry provides guidance and advice to companies and cooperatives in preparing restructuring programmes and produces technical background documents for the minister responsible for economic development and technology related to decisions on granting state aid for rescuing and restructuring companies. It monitors the implementation of restructuring projects, produces reports on granted rescue and restructuring aid and expert analyses on the effectiveness of the granted rescue and restructuring aid.
It also drafts proposals of acts and implementing regulations referring to the regulatory framework of the sector and its areas of action, and carries out and coordinates activities in communication with the European Commission. Rescue and restructuring aid to large companies or cooperatives and rescue and restructuring aid exceeding EUR 10 million is granted by the Ministry following individual notification to the European Commission and obtaining a decision on the compliance of the notified aid with internal market rules.
Terms for aid
The necessary conditions assessed by the Ministry are as follows:
- general terms for aid – Article 7 of the Act,
- the applicant must be a company or cooperative in difficulty – Article 8 of the Act,
- the applicant must have a systemically important role for the state or region – Article 9 of the Act.
A sufficient condition, which is assessed by the expert commission, is a quality, credible and realistic restructuring programme, which enables the company to restore its long-term market viability with a reasonable degree of probability. This is determined by Paragraph six of Article 27 of the Act. Another condition is a concluded framework agreement of an applicant with banks on the restructuring of claims as defined by the third indent of Paragraph one of Article 27 of the Act.
Types of rescue and restructuring aid
The Ministry provides aid:
- during the preparation of the restructuring of a company or cooperative (also called “rescue aid”);
- for the implementation of the restructuring programme for restoring long-term market viability of a company or a cooperative (also called “restructuring aid”);
- intended as a support for the restructuring of a company or a cooperative, which is funded mainly by a company's or a cooperative's own resources (also called “temporary restructuring support”).
The aids may be granted in the form of a loan, subsidy, guarantee or capital investment.