A judge has dismissed the lawsuits filed by two bankrupt Maine hospitals that haven’t been allowed to receive funds from a federal loan program aimed at propping up businesses during the coronavirus pandemic, the Bangor Daily News reported. Now, the hospitals hope that Maine’s congressional delegation may be able to find a solution to their financial challenges. In late April, Calais Regional Hospital and Penobscot Valley Hospital in Lincoln both warned that they could have to close their doors by the end of June without funds from the Paycheck Protection Program, which offers forgivable loans to help businesses keep their staff employed through the pandemic. The Small Business Administration’s interim rules for the program bar any applicants in bankruptcy proceedings from applying for the loans, which are extended by commercial banks with backing from the federal government and can be forgiven if at least three-quarters of the funds are spent on payroll and wages, among other conditions. The two hospitals have more recently found some breathing room and do not expect to immediately close, after they each received funds totaling at least $3.5 million from separate federal coronavirus stimulus programs, according to court records. Both of them are in the middle of chapter 11 bankruptcy proceedings to restructure their debts. Bankruptcy Judge Michael Fagone yesterday ruled against the hospitals in their lawsuits against the head of the Small Business Administration. Judge Fagone had previously granted a temporary restraining order against the head of the Small Business Administration allowing the hospitals to apply for the funds, but Calais Regional Hospital has had trouble finding a bank to loan the $1.8 million it’s seeking. In his 31-page ruling against the hospitals, Judge Fagone called the hospitals “particularly sympathetic,” but wrote that the Small Business Administration “made reasonable choices about how to allocate a large but finite amount of aid among struggling businesses.”
