Potential stimulus bill could allow companies in bankruptcy to pursue PPP loans
Small businesses that have filed for bankruptcy, or nearing that step, might get their own shot at a Small Business Administration Paycheck Protection Program loan under a stimulus provision being debated in Congress.
The proposal, filed as part of broader stimulus measures last week by Sens. Marco Rubio, R-Fla., and Susan Collins, R-Maine, would allow the SBA administrator to open the forgivable loan program to companies that are, or plan to be, in bankruptcy proceedings — a category of businesses that the SBA had initially shut out of the PPP.
The bankruptcy court must agree to grant these businesses a PPP loan, which would then receive a “super priority” designation to ensure the SBA would be paid back for any unforgiven portions, according to the proposal. The move could open up the PPP to thousands or more companies mired in the bankruptcy process as the coronavirus pandemic drags on and local economies struggle to reopen.
“I do think that this is a step forward in making sure the companies that are needing it are getting it,” said Eric Holland, a partner at law firm Reed Smith LLP who has worked on several bankruptcy cases.
https://www.bizjournals.com/seattle/news/2020/08/04/congress-stimulus-bill-bankruptcy-ppp-loan-sba.html
