Cleary Gottlieb Discusses Europe’s Easing of State-Aid Rules for Pandemic-Related Recapitalizations

On May 8, 2020, the Commission published an important new communication aimed at relaxing State aid rules for COVID‑19‑related equity injections by States into non‑financial companies.[1] While previous initiatives aimed at relaxing State aid rules (in particular the so‑called “Temporary Framework”, or “TF”, adopted on March 19, 2020) [2] were focused on maintaining companies’ access to liquidity, this new communication recognizes that the economic effects of COVID‑19 will also endanger their solvency and thus require more structural (and potentially competition‑distortive) measures such as equity or hybrid capital injections or subordinated loans (i.e., debt instruments that are subordinated … Read more