64 LEGAL IMPACTS OF COVID-19 IN THE TOURISM INDUSTRY with the rules of 3.11 TF to be able to grant equity and/or hybrid capital122. Member States can notify schemes, as well as ad hoc aid measures to specific beneficiaries under 3.11 TF, but any individual aid award in excess of 250 million euros must be notified separately, even if granted under a scheme approved by the Commission123. Recapitalisation aid is regulated stringently and in detail because of its highly distortive nature.124 The Temporary Framework includes comprehensive entry125, exit126, pricing127 and governance rules, including measures to limit the distortion of competition128. The amount of recapitalisation is limited to the necessary amount to restore the beneficiary’s viability, and in any case it may not go beyond restoring the capital structure on 31 December 2019129. Being an exceptional measure, recapitalisation under 3.11 TF is only available in select circumstances (to beneficiaries that would otherwise likely go out of business, but there must also be a common interest to intervene, and it must be clear that the beneficiary cannot find funding from the market)130. The beneficiary undertaking cannot have been in difficulty on 31 December 2019 to be eligible for 3.11 TF recapitalisation aid131; those in difficulty at the end of 2019 can receive rescue and restructuring aid under Article 107(3)(c) of the TFEU and the Rescue and Restructuring Guidelines132. It should also be noted that beyond equity and hybrid capital, subordinated loans can also be granted under the Temporary Framework (they are regulated as a subcategory under 3.3 TF aid133, but 3.1 TF aid is also possible as a subordinated loan). The Temporary Framework also allows 3.2 TF guarantees for subordinated loans134 (and 3.1 TF aid in the form of guarantees on subordinated loans is not excluded by the rules either). Recapitalisation aid has been used to help, among others, large companies in the tourism and related sector in situations when significant amounts of equity 122 Footnote 67 of the Temporary Framework defines hybrid capital as instruments “that have characteristics of debt as well as of equity”, e.g. convertible bonds. 123 Point 51 of the Temporary Framework. 124 Point 7 of the second amendment. 125 Section 3.11.2 of the Temporary Framework. 126 Sections 3.11.5 and 3.11.7 of the Temporary Framework. 127 Section 3.11.5 of the Temporary Framework. 128 Section 3.11.6 of the Temporary Framework. 129 Point 58 of the Temporary Framework. 130 Point 49(a) to (c) of the Temporary Framework. 131 Point 49(d) and (d-bis) of the Temporary Framework. 132 Communication from the Commission - Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty OJ C 249, 31.7.2014 133 Point 27-bis of the Temporary Framework. 134 Point 25-bis of the Temporary Framework.
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