In March 2020, Congress created the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. The CARES Act, through the PPP, authorized loans to small businesses to help pay for certain business-related expenses, including payroll. The U.S. Small Business Administration (“SBA”) administered the PPP and guaranteed the loans, which were eligible for forgiveness if certain program requirements were met. Regulations promulgated by the SBA set forth various loan eligibility requirements. Under SBA regulations, businesses involved in bankruptcy proceedings were ineligible for PPP loans. To assist the SBA in making eligibility determinations, the loan and forgiveness applications required that borrowers certify that they provided truthful information in response to questions about eligibility requirements, and that they were eligible for the PPP.

ARC is a manufacturer of automotive airbag inflators and has a principal office located in Knoxville. It operates manufacturing plants in Tennessee and Kentucky, and entities related to ARC operate manufacturing facilities in other countries, including China. According to the contentions of the United States contained in the settlement agreement, in May 2020 ARC received $2,935,062 after applying for a loan under the PPP. In June 2021, the loan was forgiven after ARC applied for loan forgiveness. The...

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