On May 8, 2020, following consultation with EU Member States, the European Commission (the ‘Commission’) amended for the second time the State aid Temporary Framework (the ‘TF’). The most significant feature of this amendment lies in the addition of capital injections (State recapitalizations) to the panoply of State aid measures that Member States may adopt to support businesses that are suffering because of the COVID-19 outbreak. These State recapitalization measures aim to address solvency issues that businesses are expected to face in the longer term, whereas the initial focus of the TF was on support measures that help companies cope with immediate liquidity shortages. The amendment also introduces the possibility for Member States to grant support in the form of subordinated debt, which is subordinated to ordinary senior creditors in the case of insolvency proceedings.
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