New Restaurant Relief Fund Threatens to Stiff Bankrupt Companies

Restaurants and bars that filed bankruptcy in the wake of pandemic losses are facing a possible shutout from a new $28.6 billion federal fund meant as a lifeline for the industry.

The Small Business Administration, which administers the Restaurant Revitalization Fund, says bankrupt companies can’t apply unless they have a court-approved bankruptcy plan.

That restriction is a major concern, as struggling restaurants may not be able to get their bankruptcy plans approved before the money runs out, insolvency professionals say.

“All companies that file an application are saying that they’re having financial difficulty; I don’t see why it’s different if ...