Judge Now Allows SBA to Block Bankrupt Companies From Virus Aid

The Small Business Administration can block bankrupt borrowers from obtaining Paycheck Protection Program loans, a Maine bankruptcy judge ruled.

The proposed ruling filed Wednesday by Judge Michael A. Fagone of the U.S. Bankruptcy Court for the District of Maine is a reversal of his earlier decisions to grant temporary restraining orders in favor of two bankrupt small hospitals in the state.

The proposed decision will go to the U.S. District Court for the District of Maine, which will determine whether to adopt it and issue a judgment.

Bankruptcy courts across the country have been wrestling with whether the SBA’s categorical ...