Virus Bill Leaves Bankrupt Firms in Limbo Without SBA Directions

A new legislative proposal wants to steer coronavirus stimulus package loans to bankrupt businesses, but its lack of specific directions to the loan administrator is stirring doubts that it could achieve the goal.

The Small Business Administration, which oversees the Paycheck Protection Program loans, has refused to issue the loans to bankrupt companies, wary that they’d present too much risk.

A Senate Republican bill, (S. 4321), introduced last week, would amend the bankruptcy code to specifically allow bankruptcy courts to approve PPP loans. It also gives the PPP loan a super-priority status in the order of fund distributions ...