(a) Partial liquidation or disallowance of a portion of an RLF Grant. If the RLF Recipient engages in certain problematic practices, EDA may disallow a corresponding proportion of the Grant or direct the RLF Recipient to transfer loans to an RLF Third Party for liquidation. Problematic practices for which EDA may disallow a portion of an RLF Grant and recover the pro-rata Federal Share (as defined in Sec. 314.5 of this chapter) include the RLF Recipient:
(1) Having RLF loans that are more than 120 days delinquent;
(2) Having excess cash sequestered for 12 months or longer and EDA has not approved an extension request;
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(c) * * *
(3) EDA may enter into an agreement with the RLF Third Party to liquidate the assets of one or more RLFs or RLF Recipients;
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