June 30, 2020
Danning Gill Partner Zev Shechtman spoke with Bloomberg Law about the legal fight over bankrupt companies’ eligibility to apply for the government’s coronavirus relief funds.
Companies have until midnight June 30, 2020 to apply for the loans made available by the Paycheck Protection Program, administered by the Small Business Administration to help businesses manage payrolls amid the economic turmoil caused by Covid-19.
The SBA blocks bankrupt companies from applying for the loans, a rule that has triggered lawsuits. Courts are conflicted on whether the SBA rule is legal.
“I don’t think I’ve ever seen so many cases on one issue in such a short amount of time with such divergent results,” said Shechtman.
Despite the litigation, the SBA’s policy is still a barrier for businesses without the resources to challenge a government agency in court, attorneys say.
At least one bankrupt business didn’t apply for the PPP, concerned that it “would be a fight and just a waste of time,” Shechtman said.
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