How do I know if I'm 'undertaking in difficulty'?

Have you entered into insolvency proceedings?

You’re an ‘undertaking in difficulty’ if you’re subject to collective insolvency proceedings, which are any of the following:

    • Winding-up by or subject to the supervision of the court;

    • Creditors' voluntary winding-up (with confirmation by the court).

    • Administration, including appointments made by filing prescribed documents with the court;

    • Voluntary arrangements under insolvency legislation; or

    • Bankruptcy or sequestration.

Have you had a bailout before?

You're technically an 'undertaking in difficulty' if you’ve had rescue aid before and not paid it back yet, or restructuring aid and you're still on the plan.

Additional criteria for medium-sized enterprises

You’re a medium-sized enterprise if you have at least:

  • 50 employees; and/or

  • £9 million in annual turnover and/or annual balance sheet total (as per your last approved annual accounts, or an estimate for the financial year if you don’t yet have approved annual accounts)

Is your business still making a loss?

Specifically, you're an 'undertaking in difficulty' if you’re a medium-sized enterprise and your accumulated losses add up to more than half of:

  • Your subscribed share capital, if you’re a limited company.

  • Your capital, if you’re an unlimited liability company.

Note: This criteria doesn't apply if your company has fewer than 250 employees and is less than 3 years old.

Additional criteria for large enterprises

You’re a large enterprise if you have at least 250 employees. 

Do you know your debt to equity ratio?

We call these 'solvency ratios': how much you owe versus how much you're worth as a business.

If you’re a large enterprise – these ratios have an impact on whether or not we can lend to you. That's because technically you're 'an undertaking in difficulty' if, for the previous 2 years:

  • Your book debt to equity ratio is above 7.5; and

  • Your EBITDA interest coverage ratio was below 1.0.

You need both those things to be true to be 'in difficulty'. 

'Undertaking in difficulty' is defined in Article 2(18) of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty. - We've provided the extract here.

If you're still not sure, just get in touch: give us a ring on 020 3778 0274 and we'll talk it through.