Yesterday was the deadline set by Treasury Secretary Steve Mnuchin for public companies to return federal bailout money they took under the Paycheck Protection Program. Failure to do so, he warned, would lead to an audit and possible criminal liability. Oh yea, and while returning that money, those companies should also send a floridly-worded apology note for their transgression of the completely clear and unchanging terms of the program.

Surely, then, everyone made sure to get their checks in before the deadline and the collapse of the U.S. Postal Service?

In the week before Monday’s deadline, 14 more public companies said they were giving back the money.

In the same period at least 30 others said they were keeping the money—around $110 million in all—a decision some said could lead to an audit of their applications. Those companies, whose market caps range from about $4.5 million to $560 million, say they believe they are eligible.

Believe? What do you mean believe? As Mnuchin made clear a week after changing the guidance around the all-too-scarce PPP loans, nothing had changed! As ever, the Trump administration had been the very epitome of detailed planning and clear specificity and not at all a seat-of-the-pants disaster writing checks with its mouth that courts will refuse to cash. Right?

“I don’t see anybody being convicted for this, honestly,” said Scott Pearson, a partner at Manatt, Phelps & Phillips. “What will scare people away is the threat of being accused. The suggestion there is criminal liability for a company that has a good argument that they were eligible for these loans based on the structure of the CARES Act is ludicrous….”

“They’re trying to use public shaming mechanisms to embarrass companies into giving money back that, technically, they’re allowed to take under the program,” said Axelrod, now a partner at law firm Linklaters….

Even in cases when an audit reveals that a borrower shouldn’t have taken the loan, the SBA will simply ask for repayment of the money. If a company does that, the SBA said it “will not pursue administrative enforcement or referrals to other agencies.”

That change lowers the risk even further that companies keeping PPP loans will have cases referred to the Department of Justice or the Securities and Exchange Commission, legal experts said.

At Least 30 Public Companies Say They Will Keep PPP Loans [WSJ]
Public companies face little risk of punishment for taking PPP loans, legal experts say [CNBC]

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