Dan Bearden thought that getting a $947,000 COVID-19 relief loan would be just the lifeline that Dancor, his trucking company, needed to survive bankruptcy reorganization. But the U.S. Small Business Administration denied Dancor Transit Inc.’s application for the Paycheck Protection Program because the company is in chapter 11 bankruptcy, Arkansas Business reported. Dancor, like several other companies across the country in bankruptcy restructuring, sued the SBA for preventing firms in bankruptcy from accessing forgivable loans under the federal Coronavirus Aid, Relief & Economic Security Act. Dancor filed a complaint against the SBA on April 20 inside its case in U.S. Bankruptcy Court in Fort Smith. It wants the judge to remove the phrase on the loan application that asks if a company is “presently involved in any bankruptcy.” “Without a PPP loan, it is questionable whether Dancor can meet payroll, rent, utility, or debt obligations as they continually come due,” Dancor’s attorney, Kevin Keech of Little Rock, wrote in the filing. “Without a PPP loan, Dancor may cease to be a viable company and may have to convert its case to a chapter 7 liquidation, which will result in many of its creditors receiving little to no payment in satisfaction of their debts.” Meanwhile, Dancor has reapplied for a PPP loan, and a case in Texas offers some encouragement. A bankruptcy judge there criticized the SBA for denying the Hidalgo County Emergency Service Foundation’s PPP loan just because it is in bankruptcy. Read more.
Read more about In re Hidalgo County Emergency Service Foundation in the RDW.
