Hidalgo County Emergency Service Foundation v. Carranza, No. 20-40368 (5th Cir. 2020)Annotate this Case
Hidalgo, which is in Chapter 11 bankruptcy, alleged that it was denied a Paycheck Protection Program (PPP) loan under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) based on its status as a bankruptcy debtor. The bankruptcy court ruled in favor of Hidalgo and issued a preliminary injunction mandating that the SBA handle Hidalgo's PPP application without consideration of its ongoing bankruptcy.
The Fifth Circuit held, under well-established circuit precedent, that the bankruptcy court exceeded its authority when it issued an injunction against the SBA Administrator. The court explained that the issue at hand is not the validity or wisdom of the PPP regulations and related statutes, but the ability of a court to enjoin the Administrator, whether in regard to the PPP or any other circumstance. Accordingly, the court vacated the preliminary injunction.