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Draft ID: c30eb3b9-36eb-4c6e-bea8-df1ad6d4bb8c Date: 01/09/2025 11:01:40



Public Consultation Questionnaire - Revision of the Rescue and Restructuring Guidelines


Introduction

The Rescue and Restructuring Guidelines and the need to revise them

The currently applicable Rescue and Restructuring Guidelines were adopted in 2014 and are based on the 2004 Rescue and Restructuring Guidelines. However, the basic principles of the Rescue and Restructuring Guidelines were laid down long before, as the European Commission at least since the 1970s allowed State aid to Undertakings in Difficulty and specific guidelines were adopted in 1994, 1997, 1999 and 2004.

Financial distress at the company level plays a signaling role in an economy, indicating that a firm is not making optimal use of its resources. While financial distress and consequent market exit plays a key role in ensuring an efficient allocation of resources, they can have negative economic consequences, which can justify public support. There is general consent that rescue and restructuring aid is distortive and detrimental to productivity and should be allowed only under strict conditions.

The Rescue and Restructuring Guidelines set out the conditions under which the Commission deems State aid granted to rescue or restructure Undertakings in Difficulty to be compatible with the internal market. Besides few exceptions, rescue or restructuring support is the only aid Undertakings in Difficulty can receive.

Since the last revision of the Rescue and Restructuring Guidelines in 2014, the Commission has applied them in a large number of cases covering various sectors of the economy. The Commission practice and the case law of the EU Courts show that the Rescue and Restructuring Guidelines in general work well. Moreover, this view was supported by the results of an evaluation conducted in the context of the Fitness Check of the 2012 State aid modernisation package, railways guidelines and short-term export credit insurance published in 2020. The Fitness Check focused in particular on the Undertaking in Difficulty definition and came to the conclusion that the Undertaking in Difficulty criterion largely meets its objective to identify companies in difficulties correctly, but it is not entirely clear and easy to apply for national authorities and guidance and/or clarification might be needed.

Based on its case practice, the evaluation in context of the Fitness Check and ad hoc contributions received since the conclusion of the Fitness Check, the Commission considers that there is considerable evidence
available to allow revising the Rescue and Restructuring Guidelines.

The purpose of this public consultation is to collect feedback on the key revisions on substance envisaged by the Commission to take better into account the challenges faced by companies in the EU. In particular, the Commission is envisaging updating the scope of the guidelines. It is considering lifting the exclusion of the steel sector and to review the parameters defining an Undertaking in Difficulty.

The results of this public consultation will be summarised in a factual report, which will be published on the Have Your Say website. At the end of the survey, you can upload a file with a more detailed contribution.

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1. Sectorial Scope of the Rescue and Restructuring Guidelines

The questions in this section aim at assessing whether the current state of the EU economy would justify a change in the sectors covered by the Rescue and Restructuring Guidelines.

Background

Currently all sectors can benefit from aid under the Rescue and Restructuring Guidelines except the coal and steel sectors and the financial sector. Concerning the steel sector, its exclusion from the scope of the Rescue and Restructuring Guidelines had been historically motivated by the existence of significant overcapacities globally and in the EU market. The current exclusion of the steel sector means that if a steel company is under financial distress (considered an Undertaking in Difficulty) it cannot receive any State aid, including State aid under the Rescue and Restructuring Guidelines, unlike undertakings active in other metal sectors, such as aluminium.

Global overcapacity still affects European producers and their employees. Moreover, the pressure on the EU steel industry from imports is taking place against the background of decarbonisation and new challenges to the global trade system. Due to the challenges faced, the Commission adopted an Action Plan for Steel and Metals, which outlines the importance of the steel sector which is among the most vulnerable sectors in transition.

Within the EU market overcapacities have decreased and EU production can cover most of the EU’s domestic demand in steel (90%). Between 2014 and 2023, EU steel industry production capacity has decreased significantly (crude steel production has decreased by around 20%). In the same vein, employment in the sector decreased by around 10%. At the same time, in 2024, global overcapacity was estimated to be more than four and a half times the EU’s yearly consumption. The EU steel industry went from a substantial trade surplus to a significant deficit.

Question 1

In your experience, has the exclusion of the steel sector from the Rescue and Restructuring Guidelines had a positive impact on:









Please justify your answer:
2000 character(s) maximum

Question 2

In your experience, has the situation of the steel sector changed compared to 2014?


has improved
has worsened
is unchanged
I do not know / no opinion
The situation









Please justify your answer:
2000 character(s) maximum


Question 3

Based on your reply to the question above, do you consider the exclusion of the steel sector from the scope of the Rescue and Restructuring Guidelines still justified?
Yes No
I do not know / no opinion

Please justify your answer:
2000 character(s) maximum


Question 4

In your view, would an inclusion of the steel sector in the Rescue and Restructuring Guidelines have:
Negative impact on both







Please justify your answer:
2000 character(s) maximum


Question 5

In your view, would an inclusion of the steel sector in the Rescue and Restructuring Guidelines have an impact on other industries relying on steel products as input?




Please justify your answer:
2000 character(s) maximum


2. Material Scope of the Rescue and Restructuring Guidelines

The questions in this section aim at assessing whether the current definition of Undertaking in Difficulty would need to be amended to address certain deficiencies raised previously by stakeholders.

Background

For undertakings that meet the criteria to be defined as Undertakings in Difficulty, rescue and restructuring aid is in principle the only route available to grant State aid. This is because rescue and restructuring aid is among the most distortive types of State aid, as it interrupts the normal competitive process leading inefficient undertakings to exit the market. The Undertaking in Difficulty concept is thus of a horizontal relevance as it is applied not only as an inclusion criterion in the Rescue and Restructuring Guidelines, but also as an exclusion criterion preventing companies from receiving aid under other guidelines.

An undertaking is considered to be in difficulty when, without intervention by the State, it will almost certainly be condemned to going out of business in the short or medium term. Whether an undertaking fulfils this definition is assessed based on four quantitative criteria in the Rescue and Restructuring Guidelines ((i) the loss of more than half of the subscribed capital in case of limited liability companies, (ii) the loss of more than half of the book capital for companies with at least some members with unlimited liability, (iii) undertakings under collective insolvency proceedings or fulfilling the criteria for being placed in collective insolvency proceedings at the request of its creditors, (iv) undertakings that are not SMEs with a book debt to equity ratio above 7.5 and an EBITDA interest coverage ratio below 1.0 for the past 2 years).

Start-ups and scale-ups

The Rescue and Restructuring Guidelines provide that an SME that has been in existence for less than three years will not be considered to be in difficulty unless it is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors.

However, in recent years it has come to the Commission’s attention that the quantitative criteria of the Undertaking in Difficulty definition may have the effect of qualifying certain start-ups or scale-ups that have a specific capital-intensive growth model and that have not yet had the time to achieve Balance Sheet growth as Undertaking in Difficulty. Although those undertakings would not be condemned to going out of business in the short or medium term, and thus barring them from receiving other forms of State aid.

The Commission reminds that the following questions concern the Undertaking in Difficulty definition of the Rescue and Restructuring Guidelines and of all other State aid rules using that term. The General Block Exemption Regulation (EU) 651/2014 (“GBER”) includes also a definition for Undertakings in Difficulty in Article 2(18) of the GBER. Aid to undertakings that fulfil the definition set out in Article 2(18) of the GBER can, in principle, not be block exempted (Article 1(4)(c)) GBER). The Undertaking in Difficulty definition of the Rescue and Restructuring Guidelines does not concern the GBER, hence no potential change to the definition in the Rescue and Restructuring Guidelines will impact the possibility of undertakings concerned to receive aid that has been block exempted.

Question 6

In your experience, is the current exemption for SMEs that have been in existence for less than three years sufficient to allow start-ups to benefit from other forms of aid?
Yes No
I do not know / no opinion

Please justify your answer:
2000 character(s) maximum


Question 7

If your answer to Question 6 was “no”, which of the following options would be sufficient to address the shortcomings:

Yes
No
I do not know / no opinion
Extend the exemption period to five years






Exempt all undertakings that fulfil the definition of start-up laid down in Article 22(2) of the GBER






Extend the exemption period to ten years







If the proposed extension period is not relevant, please provide a proposition and specify your industrial sector:
2000 character(s) maximum


Others (please specify)
2000 character(s) maximum


Please justify your answer:
2000 character(s) maximum


Question 8

Under the current rules, scale-ups fall under the definition of an Undertaking in Difficulty which prevents them from receiving aid under other State aid rules. In your view, is this specific scale-ups situation justified?
Yes No
I do not know / no opinion

Please justify your answer:
2000 character(s) maximum


Question 9

In your view, what would be the impact of an exemption of start-ups and/or scale-ups from the definition of Undertaking in Difficulty on the administrative burden and costs for authorities?










Please justify your answer:
2000 character(s) maximum


Question 10

In your view, what would be the impact of exempting start-ups and/or scale-ups from the definition of Undertaking in Difficulty on competition between undertakings within the internal market and the competitiveness of the EU economy in a global context?












Please justify your answer:
2000 character(s) maximum


The definition of “own funds”
The term “own funds” (which represents a literal translation of the French term “fonds propres” into English) is used in the definition of Undertaking in Difficulty and serves as a benchmark against which accumulated losses of a limited liability company must be evaluated, in order to establish whether such a company is in difficulty. That term is not defined in the Rescue and Restructuring Guidelines, which may create in some language versions of the Guidelines confusion as to which parts of a company’s equity and which financial instruments are covered by the term “own funds”.

Question 11

In your opinion, does the term “own funds” need to be further clarified?
Yes No
I do not know / no opinion

Please justify your answer:
2000 character(s) maximum


Question 12

If your answer to Question 11 was “yes”, what would, in your opinion, be the necessary clarification of the term “own funds”?
2000 character(s) maximum


Please justify your answer:
2000 character(s) maximum


Question 13

In your opinion, using “equity” instead of “own funds” would contribute to simplifying the assessment of this criterion, given that a company’s equity is readily available from its balance sheet?
Yes No
I do not know / no opinion

Please justify your answer:
2000 character(s) maximum


Other comments on the definition of Undertaking in Difficulty

Question 14

Do you have any other comments concerning the definition of Undertaking in Difficulty for the purposes of the Rescue and Restructuring Guidelines or other State aid rules.
Yes No

If yes, please elaborate:
2000 character(s) maximum


3. Additional information

Question 15

Do you want to raise any other points which may be relevant for the revision of the Rescue and Restructuring Guidelines?
Yes No

If yes, please elaborate:
2000 character(s) maximum


Additional documents

If you want to share any document (e.g. data, research paper, position paper, etc.) that may be relevant for the revision of the Rescue and Restructuring Guidelines, please upload it here. Please make sure not to include any personal data in the file you upload if you wish to remain anonymous.
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Please upload your file(s)
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