Minnesota Judge Approves PPP Loan for Chapter 11 Debtor

On June 3, 2020, Bankruptcy Judge Michael E. Ridgeway approved the terms of a post bankruptcy loan under the Federal Payroll Protection Program (“PPP”).  There is currently a split among bankruptcy courts around the country whether Chapter 11 debtors are eligible for the PPP funds.  The debtor, Rancher’s Legacy Meat Co., case 10-32928 MER, made an application for a PPP funds from TCF National Bank in the amount of $415,000.  Rancher’s operates a specialty meat processing plant in Vadnais Heights, Minnesota, employing 30 full time and approximately the same number of part-time or temporary employees.  The Court approved the terms of the loan as in the best interests of the estate. Minneapolis Partner Cameron Lallier, counsel for the debtor stated, “The PPP loan will help the liquidity of the company as it moves towards a successful  reorganization.”  Courts which have approved the PPP applications in other cases  point to the debt forgiveness provisions of the act which operate to make the PPP program more in the nature of a grant rather than a loan.