52 LEGAL IMPACTS OF COVID-19 IN THE TOURISM INDUSTRY degree when the first amendment64 to the Temporary Framework was adopted on 3 April 2020. The first amendment allowed aid under the Temporary Framework to all undertakings that had not been in difficulty on 31 December 2019; it was no longer necessary to prove in any form, at least to apply the Temporary Framework, that the undertaking was actually negatively affected by the pandemic-induced crisis. Also, Section 3.1 measures were extended by adding loans, capital and guarantees to the possible forms of aid, giving a lot of flexibility to aid grantors: with the amendment, it was possible to provide loans on any terms or guarantees to loans provided that the loan or the guaranteed loan principal would not exceed the threshold of Section 3.1 aid65. The first amendment also brought in five new aid categories, three of which were related to the anti-virus efforts. These allowed COVID-19 related research, development, upscaling, testing and production aid (Sections 3.6-3.8 of the Temporary Framework). The last two, Section 3.9 and 3.10, authorised Member States to grant tax deferrals (as non-general measures) and wage subsidies, respectively. The second amendment, adopted on 8 May 202066, was the only amendment deliberated on for a longer period as the first draft had been sent to Member States on 9 April67. The novelty of the 8 May amendment was that it meant a manifest departure from liquidity aid approach: by introducing the new aid category, recapitalisation aid (Section 3.11). Based on these developments, the Commission recognised that viable undertakings subject to a temporary liquidity crisis will possibly have to face longer-term solvency issues, and thus might need equity to prevent their unnecessary exit from the market (airlines being a prime example)68. The recapitalisation aid rules were also different in the sense that while the other aid categories of the Temporary Framework had simple and concise conditions, recapitalisation (equity and hybrid capital instruments offered by the State), a highly distortive form of aid, brought a stringent and detailed set of criteria regarding the entry, remuneration and timely exit of the State, governance of the undertaking and measures to limit distortions of competition. 64 Communication from the Commission Amendment to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, C(2020) 2215 final, 3 April 2020. 65 Point 12 of the first amendment. 66 Communication from the Commission Amendment to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak C(2020) 3156 final 8 May 2020. 67 Source: https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_20_610 (accessed on 1 March 2021). 68 Point 4 of the second amendment.
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