Financial distress and market exit play a key role in ensuring an efficient allocation and may also have negative social and economic consequences like loss of employment and output in particular areas, loss of technical knowhow and expertise or disruption to important services. In this context, State aid for the rescue and restructuring aid of firms in difficulty is a policy tool that may, in certain circumstances, be appropriate to address the negative consequences of financial distress. However, there are a number of costs associated with rescue and restructuring aid which imply that its use is only appropriate under strictly limited circumstances. Therefore, the Commission allows state aid to firms in difficulty only under strict conditions.The purpose is to evaluate whether, in its ex-ante assessment of the restructuring plans submitted by the Member States, the Commission is effective in achieving the objective of ensuring that restructuring aid (rescue aid is excluded from the scope of the project) is granted only if a restructuring plan is likely to return the firm to long-term viability within a reasonable period of time. Within an international project team ZEW will conduct the econometric analysis.