Fast casual restaurant Cosi sued the Small Business Administration yesterday, alleging it illegally denied its $3.7 million emergency loan request on grounds that the company is currently undergoing bankruptcy proceedings, Yahoo Finance reported. The Charlestown, Mass.-based flatbread chain filed a lawsuit yesterday in the U.S. Bankruptcy Court for the District of Delaware, arguing that the company should be eligible, under the CARES Act, to apply for Paycheck Protection Program loans designed to help small businesses keep employees on payroll amid the novel coronavirus. In a five-count complaint, requesting that the court enjoin the SBA from excluding Cosi and other bankruptcy debtors from access to PPP funds, the food chain alleges that the exclusion is discriminatory, exceeds authority under the CARES Act, and is arbitrary and capricious. “No law, regulation, or rule of any kind disqualifies, or authorizes the SBA to disqualify, bankruptcy debtors from participating in the PPP,” the complaint states. According to Cosi, holding back PPP funds from companies in bankruptcy runs counter to the stated purposes of the CARES Act. Cosi filed for chapter 11 bankruptcy on Feb. 24, before the number of coronavirus cases exploded in the U.S.
