Buczek Automotive was not in receipt of unlawful State aid and did not need to repay any funds, the Court of Justice has ruled.

The ECJ's ruling dismissed an appeal by the European Commission. The appeal challenged a decision by the General Court to overturn the Commission's original ruling that Buczek Automotive should repay unlawful State aid.

Buczek Automotive was owned by Technologie Buczek Group (TB) and had manufactured tubes, mainly for the automotive sector. In December 2012 the company was deleted from the National Court Register as a result of liquidation proceedings.

TB had fallen into financial difficulties and was due to receive State aid under Poland’s national restructuring programme for the steel industry but didn’t fulfill the conditions for receiving funds. As TB’s debts were not canceled or rescheduled, the Polish authorities took steps to recover unpaid tax and social security receivables from TB, but only recovered small amounts.

In 2007, the European Commission ruled that the Polish authorities had effectively waived their rights to the entire amount of receivables by choosing to follow debt recovery procedures rather than having TB declared insolvent (which, it ruled, is what a hypothetical private creditor would have done). It found that this waiver amounted to the granting of over PLN 20.5 million (c. 4.9 € million) in unlawful State aid.

TB subsidiaries were ordered to repay the State aid in proportion to the benefit received, which amounted to over PLN 7 million (c. €1.75 million) in the case of Buczek Automotive.

TB and its subsidiaries contested the decision and lodged actions to have it annulled. TB and its subsidiary, Huta Buczek, then withdrew their actions, leaving only Buczek Automotive’s application to be heard by the General Court.

In 2011, the General Court upheld Buczek Automotive’s application, ruling that the Commission had failed to show that the hypothetical private creditor would have recovered more money from it by initiating insolvency proceedings than the Polish authorities had recovered by debt recovery proceedings. This meant that the Commission’s defective use of a hypothetical private creditor test was contrary to Treaty provisions and had not established the existence of State aid.