U.S. Can Deny Virus Aid Loan to Bankrupt Cosi, Court Rules (1)

Two bankruptcy courts so far have reached different conclusions about whether the Small Business Administration can deny Paycheck Protection Program loans to companies in Chapter 11.

The SBA, which is administering the $659 billion Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, had been denying applications if applicants are in bankruptcy proceedings. The guaranteed loan program provides forgivable loans of up to $10 million to small businesses that are financially distressed by the Covid-19 pandemic.

Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware in a bench ruling Thursday said ...