A Brave New [COVID] World: Dealing with a Customer in Bankruptcy That Has a PPP Loan


Webinar Recording Access:

Watch the webinar recording

Webinar Presentation
(Adobe PDF File)

Presented on:

Thursday, March 25, 2021
2 to 3 p.m. (Eastern)


This one-hour webinar will provide manufacturers and distributors with considerations for selling to a customer in bankruptcy that has obtained a PPP loan and best practices to minimize risk, maximize recovery, and get paid.

Who Should Attend:

All toy professionals; specifically recommended for manufacturers, wholesalers, and/or distributors involved in credit, finance, and legal functions.

What You Will Learn:

The Paycheck Protection Program (PPP) created a lifeline for many businesses that faced early struggles in the COVID-19 environment. Some obtained PPP loans before filing for bankruptcy to use during bankruptcy proceedings. However, PPP loan proceeds are intended for “authorized purposes,” and guidance from Congress and the Small Business Administration (SBA), which administers the PPP loan program, offers only modest clarifications for the new round of PPP funding.

This webinar will address the multitude of issues this raises for debtors in bankruptcy that wish to use their PPP loan funds and for vendors that continue to do business with those debtors. It will cover:

  • if the bank that issued the loan can block use of the funds;
  • if officers and directors of the debtor can prevent the debtor from using PPP funds to pay vendors;
  • if vendors that are paid from PPP loan funds have to return them; and
  • if PPP loan funds are used for operations and result in revenue, will the new cash become part of the prepetition lender’s cash collateral, potentially diminishing returns for unsecured creditors


Paul Vitale, executive vice president of finance & operations, The Toy Association


Jason M. Torf, partner at Ice Miller LLP

Torf is a bankruptcy and creditors’ rights partner in the law firm Ice Miller LLP. He regularly represents clients in helping them solve their problems with troubled customers, both in bankruptcy proceedings and otherwise. He is a frequent speaker to credit groups to help them understand practical steps their companies can utilize to minimize risk and maximize their recovery when dealing with a financially troubled customer.