3.3.8 Controlled winding-up

The objective of a controlled winding-up is to support value preservation in failing banks.1 Value is preserved by means of a controlled winding-up on a going concern basis instead of the bank being subjected to regular bankruptcy proceedings.2 In the context of a financial crisis, the market conditions are not very favourable for assets disposals: a swift sale of assets would thus be at an excessive discount and would not reflect the real value of the assets.3 State aid may be needed to keep the bank afloat whilst it is wound-down. This usually amounts to liquidity support. For instance, the Slovenian State granted Probanka a liquidity facility. In that context, the Slovenian State granted a State guarantee on newly issued debt. This guarantee was issued to allow Probanka to draw a direct emergency loan (emergency liquidity assistance) from the Bank of Slovenia.4