Eastern Niagara Hospital, which filed for chapter 11 protection in November, temporarily withdrew its filing last month so it could obtain a $5.85 million loan from the federal government, the Buffalo (N.Y.) News reported. The legal maneuver made the Lockport, N.Y., hospital eligible for funds from the Paycheck Protection Program, a federal program to help businesses avoid laying off workers during the COVID-19 pandemic. The U.S. Small Business Administration, which administers the program through participating banks, rejected Eastern Niagara's application because of the chapter 11 filing. In late May, Eastern Niagara sued the SBA for rejecting its PPP application, even though the first question on the application form was whether the applicant has filed for bankruptcy. The form said that if the answer is yes, there would be no loan. But the hospital's attorneys, Jeffrey A. Dove and Beth A. Bivona of the Barclay Damon law firm, came up with an easier way of obtaining the $5.8 million. On June 18, they asked to withdraw the chapter 11 petition, so the hospital could file a PPP application before the program's money ran out on June 30. The hospital also dropped its lawsuit against the SBA, with Dove and Bivona writing in a court filing that even if the hospital beat the SBA in court, the federal agency might not have any money by then. U.S. Bankruptcy Court Judge Carl L. Bucki signed the dismissal order June 24. Two days later, the SBA approved the hospital's loan application. Last Wednesday, the hospital filed a fresh bankruptcy petition in Judge Bucki's court and announced all the employees it furloughed during the pandemic had returned to work. Hospital spokeswoman Carolyn Moore said all the loan money was used for payroll. "This financial reorganization must be concluded to ensure our sustainability," hospital president and CEO Anne E. McCaffrey said in a prepared statement.
