NEW YORK
Law360
June 11, 2020
By Rick Archer
A New York federal judge has rejected a pair of Roman Catholic dioceses’ challenge to a U.S. Small Business Administration rule barring coronavirus relief loans to bankrupt businesses, saying the agency was within its rights to deny them $2.8 million in loans.
On Wednesday, U.S. District Judge Elizabeth Wolford rejected the arguments by the bankrupt Catholic dioceses of Buffalo and Rochester, New York, that the SBA had no legal grounds for its rule denying Paycheck Protection Program loans to organizations in Chapter 11, saying the agency is under a legal requirement to make sure its loans are likely to be repaid.
The PPP, created under March’s coronavirus relief package, is an SBA-administered program that offers loans of up to $10 million from third-party lenders to firms with 500 or fewer employees to cover their costs while they are shuttered by local COVID-19 shutdown orders.
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