DISTRESSED DAILY: Firms ‘Unfile’ Bankruptcy to Get U.S. Bailouts

Say your business needs a bailout from the federal Paycheck Protection Program, but you’ve already gone bankrupt, making your firm ineligible. Tough luck, right?

Maybe not. Some companies have “unfiled” for bankruptcy, arranged a PPP bailout loan, and then almost immediately went straight back to court. They range from a rural Texas hospital to a group of pizza joints in Tennessee and a Portland, Oregon firm that provides security for concerts.

The logic behind the PPP law was to ensure money went to save jobs, not to prop up failing companies, said Las Vegas bankruptcy attorney Brett Axelrod. But Congress ...