Bankrupt Companies Dealt Judicial Blow in Bid for Virus Aid (1)

The Small Business Administration’s rules preventing bankrupt companies from seeking Paycheck Protection Program loans can’t be judicially blocked, a federal appeals court said, narrowing a Texas ambulance operator’s chances for Covid-19 stimulus aid.

Precedent states that “all injunctive relief directed at the SBA is absolutely prohibited,” a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit said Monday. The decision, the first from a federal appeals court on the issue, reverses a Texas bankruptcy judge’s order last month that the agency consider a Chapter 11 debtor’s PPP loan application.

The SBA’s appeal was directly certified for review ...