On December 17, 2015, the EBA published final draft RTS and final guidelines on the business reorganization plans that a firm that has been recapitalized using the bail-in tool is required to produce. Under the BRRD, a firm that has been recapitalized through a bail-in must: (i) produce a reorganization plan that sets out how the firm will be restored to long-term viability; (ii) submit progress reports twice annually throughout the reorganization period. The BRRD requires the EBA to develop RTS on the minimum content of the business reorganization plans and progress reports and to issue guidelines for national regulators and resolution authorities to assess the reorganization plan. The final draft RTS require a business plan to identify and address the cause of the firm’s failure, demonstrate that the firm can operate viably in the long-term, address shortcomings in the firm’s business model (even if not related to the firm’s failure), include financial performance projections with relevant milestones and indicators. The progress report should report on implementation of the reorganization plan and include proposed amendments to the plan, if necessary. The EBA’s guidelines provide national regulators and resolution authorities with the means to assess whether the business reorganization plan is credible and realistic and consistent with other business plans prepared by the firm in parallel. Verification by independent entities, such as auditors, should be possible, where necessary.
The final draft RTS and guidelines are available at: http://www.eba.europa.eu/documents/10180/1312804/EBA-RTS- 2015-12+RTS+and+EBA-GL-2015-21+GLs+on+Business+Reorganisation+Plans.pdf.