With the two Danish state guarantee scheme for large companies and small and medium-sized companies (”SMEs”), respectively, now in place and with several other measures to improve liquidity and support businesses in Denmark having been introduced, developments across Europe, the US and beyond follow a similar pattern. New schemes and measures are being introduced or amended on a daily basis. One common denominator is that most schemes are very local and that both coordination and local law expertise is key in order for cross border groups to navigate appropriately, including to assess whether foreign group companies in Danish based groups may access local liquidity schemes. Gorrissen Federspiel together with our network of leading law firms in relevant jurisdictions stand ready to assist.
The Danish state guarantee scheme for large enterprises covers 70% of the banks’ and certain other lenders’ new loans or working capital facilities to large Danish and Faroe Islands incorporated companies with a documented or expected loss of revenue of at least 30% due to COVID-19.
It is a condition for granting the state guarantee that the borrower was not in difficulty (within the meaning of the General Block Exemption Regulation) on 31 December 2019 and it presupposes that a credit assessment is made by the bank or other lender to this effect.
The maximum duration of the guarantee is six years with a linear reduction each year.
It will be possible to use the guarantee scheme for large enterprises both with and without collateral (e.g. for the new guaranteed loan to also share in a security package granted in support for other debt).
A market based upfront fee and guarantee commission (to be determined individually but following certain critieria) will be charged to the borrower. This is in addition to the fees, interest and other costs that will be charged by the banks or other lenders.
The scheme is managed by Vækstfonden and requires that the bank or other lender files an application to Vækstfonden on a specific application form.
A separate Danish state guarantee scheme is available for SMEs. It also covers 70% of the banks’ and certain other lenders’ new loans or working capital facilities to large Danish and Faroe Islands incorporated companies with a documented or expected loss of revenue of at least 30% due to COVID-19.
The majority of the conditions for the scheme are similar to the scheme for large enterprises, however with certain exceptions, including:
In Denmark, several other measures supporting the liquidity of business have already been introduced.
Similarly, new liquidity and other measures are being introduced across Europe, the US and beyond. Examples include:
Other countries have adopted or are in the process of adopting similar or different schemes to support liquidity, etc. and the landscape changes on a daily basis.
One common denominator is that most schemes are very local. This means that both coordination and local law expertise is key in order for cross border groups to navigate appropriately, including to assess whether foreign group companies in Danish based groups may access local liquidity schemes.
Gorrissen Federspiel together with our network of leading law firms in relevant jurisdictions stand ready to assist.