According to a report from Daniel Gill of Bloomberg Law, USA Rugby has received court approval to keep and use a loan received under the Paycheck Protection Program.

The US Federal Government went to court this week to argue that USA Rugby should not get to use the money because USA Rugby is in Chapter 11 Bankruptcy, and a) Justice Brendan L. Shannon did not have jurisdiction over the use of PPP Small Business Administration loans, and b) the loan money was not intended to ne used by borrowers in bankruptcy.

But the argument ran up against the fact that the SBA approved and paid $375,000 to USA Rugby despite USA Rugby (as the United States Rugby Football Union Ltd.) had already filed for bankruptcy.

The rule against loaning the business in bankruptcy is not popular—businesses are rightly arguing that they are in bankruptcy because of the COVID-19 lockdown and the PPP loans are designed to help them through it.

As Gill wrote in his article: "The issue turns primarily on whether the SBA’s policy of categorically denying the loans to bankrupt businesses violates a bankruptcy code provision banning the government from discriminating against bankrupt companies when administering a grant program. With very favorable terms and a likelihood of forgiveness, a handful of bankruptcy judges have said PPP loans are more akin to grants."

The court hearing this week was not to approve the loan—the money had already been paid. It was, instead, to follow up on USA Rugby's request to Justice Shannon that they be able to use the funds during the bankruptcy proceedings to maintain operations. 

The SBA attorneys argued that the loan had been obtained improperly. There's some discussion as to when USA Rugby CEO Ross Young disclosed that his organization was in bankruptcy proceedings, but in the end Judge Shannon opted to allow USA Rugby to keep, and use, the money.

See the entire Bloomberg Law Article Here >>https://news.bloomberglaw.com/bankruptcy-law/bankrupt-usa-rugby-gets-court-approval-to-keep-virus-loan-money?context=search&index=0