Section 11 Trust purposes; loan loss standards - Massachusetts Statutes

Section 11. The purposes of the economic stabilization trust shall be as follows:

(a) To provide flexible high risk financing necessary to implement a change of ownership, a corporate restructuring, or a turnaround plan for an economically viable, but troubled business which faces the likelihood of a large employment loss, plant closure, or failure without such a change of ownership, corporate restructuring, or turnaround plan. The trust shall further be empowered to provide assistance to firms in specific mature industries for the purpose of technological investment or upgrading of management operations in order for the business to maintain future economic stability. The financial participation of the trust is aimed at supplementing private financial institutions and public economic development agencies when such institutions are not able to provide all the financing or bear all of the risk necessary to transfer ownership, restructure or turnaround a business in a situation where the business might otherwise fail or greatly reduce its employment.

(b) To provide flexible high risk financing in connection with the start-up of employee-owned businesses or the implementation of employee-ownership projects. The financial participation of the trust is aimed at supplementing private financial institutions and public economic development agencies when such institutions are not able to provide all the financing or bear all of the risk necessary to start-up an employee-owned business or implement an employee-ownership project.

Not less than ten percent of the financing provided pursuant to this section shall be targeted to businesses that are employee-owned businesses in order to fulfill the purposes of paragraphs (a) and (b); provided, however, that any portion of said ten percent which is not expended for the purposes of employee-owned business may be expended for other purposes authorized in this section, subject to annual approval by the commission.

In the performance of its purposes, the trust shall be deemed to be investing, not on the basis of a direct financial return on its investment but in order to reduce the social costs of a large employment loss, plant closure or business failure and to obtain the financial benefits the commonwealth receives from maintaining the operations and employment of viable businesses, and shall not be held to the loan loss standards of private commercial lenders.