Courts Grapple With Bankrupt Companies’ Loan Access (Corrected)

How courts interpret a little-known bankruptcy code provision is likely to make a big difference for bankrupt small businesses seeking Paycheck Protection Program loans.

Bankrupt companies have asked the courts for help in accessing the stimulus funds following the Small Business Administration’s move to block applications from companies in Chapter 11.

Whether or not bankruptcy courts will require the SBA to consider a company’s loan application has been pegged to how the judge reads section 525(a) of the bankruptcy code. That provision bans governments from denying a license, permit, charter, franchise, or other similar grant because the applicant is or ...