In 2020 amendments have entered into force to allow simplified restructuring. In addition to procedural arrangements to achieve a certain consensus with creditors for insolvency or insolvency debtors, it is crucial to be able to obtain additional financial resources to maintain current operations.
Companies that are already facing financial difficulties will be happy to use available options to raise funds. In this context, the provisions of the Act on 16 July 2020 on the granting of State aid for rescuing or restructuring firms that are in force since 11 August 2020
The purpose of this law is to provide financial support that will allow the company to return to full operational efficiency and recover liquidity. The Act refers to the restoration of long-term competitive capacity on the market, which means the ability to finance itself without the need to re-use support for a period of min. 10 years.
The Act indicates 3 the sole purpose for which aid may be granted.
Rescue aid – under this form of aid, support for:
- development of a restructuring plan;
- business decommissioning;
- carry out the necessary analyses.
Temporary restructuring support – within this form of aid, it is possible to obtain support that is intended to serve the entrepreneur to carry out the business for the time necessary to implement restructuring operations to restore long-term competitive capacity on the market.
Restructuring aid – under this form of aid, support can be obtained for:
The basic form of aid will be loans with defined repayment terms (legally defined interest limits based on indicators published by the European Commission). The basic repayment period is 6 months with the possibility of extension.
The amount of aid granted will depend on the individual situation of the entrepreneur and be assessed by the requested authority. In the case of restructuring aid, other forms of aid are also possible (e.g.
the inclusion of shares in increased share capital, the inclusion of bonds, the modification of the maturity of the loan to the restructuring aid provider).
Restructuring aid may only complement the own contribution of an undertaking in difficulty, which contributes to financing restructuring costs, including measures:
- 1) an undertaking in difficulty, excluding depreciation and planned profits, or
- 2) from shareholders or shareholders of an undertaking in difficulty or other undertakings belonging to the same capital group as that undertaking, or
- 3) from creditors of an undertaking in difficulty, or
- 4) other, obtained at market conditions.
The Act also introduces a limit on the remuneration of the persons managing the undertaking (members of the Management Board, members of the Supervisory Boards, chief accountants, directors, managers and their deputies) to whom the aid will be granted, which is equal to 400% the average monthly remuneration of the preceding quarter. The right of persons covered by the remuneration limit to a profit commission and prizes from the share prize fund, as well as the claim of those persons for participation in the profit or balance sheet surplus, has also been excluded.
The unit responsible for receiving and examining applications for assistance is the Agency for the Development of Industry S.A. Currently, the IDA is preparing the structures and facilities necessary to accept and handle applications. The choice of an appropriate form of assistance and the preparation of a proposal in accordance with formal requirements can be a rather demanding process, and it is worth using the help of a restructuring advisor.
Companies who should be particularly interested in the possibility of obtaining funding from these tools are those companies that have already submitted an opening request one they are considering restructuring proceedings or are considering such a possibility because of the difficult financial situation. It is appropriate that the choice of the form of financing and the preparation of the documents necessary to obtain it should take place simultaneously with the development of assumptions for the restructuring plan.
Written by Leszek Dutkiewicz, partner of Russell Bedford Poland. Associated with the company from 2011. Director of RBP office in Katowice. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.
He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices. Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.