LEGAL POSITION OF STATE AID IN INSOLVENCY PROCEEDINGS

Abstract

Article 11, paragraph 7 of the Bankruptcy Act (hereinafter referred to as the BA) stipulates that the  procedures and measures in which creditors decide,  which depart from the collective settlement of  creditors by cashing in the debtor’s property and dividing the collected funds among creditors, are  appropriately applied which govern the area of state aid. This is the only provision of the BA that deals  with the topic of state aid in insolvency proceedings.  The aforementioned provision explicitly implies that in all procedures and measures in which the debtor’s  business continues (e.g., pre-bankruptcy proceedings or bankruptcy proceedings with the implementation of a bankruptcy plan), the rules of state aid take  precedence over the rules of the BA. In addition, even though it is not explicitly prescribed by the BA, the  state aid rules should also be applied appropriately in other insolvency proceedings in which the debtor’s business ceases (e.g., bankruptcy with liquidation). This conclusion is imposed because EU state aid law  is directly applicable in national law. The paper starts with an analysis of the specificity of state aid in insolvency proceedings and a comparison of the  goals and purposes of these legal areas. It then  addresses the issue of proper reporting,  examination, and settlement of claims for the return  of state aid in insolvency proceedings. In the final  part of the paper, instructions are given on how to  properly apply rules of state aid in insolvency  proceedings and not violate any of the rules of these two legal areas and achieve their goals and  purposes, as well as de lege ferenda guidelines.