Rhode Island Judiciary Launches a COVID-19 Business Recovery Program
On March 31, 2020, the Rhode Island Judiciary launched a COVID-19 Business Receivership Program (Program) designed to assist businesses that were not in debt before the current pandemic but whose operations have since been seriously disrupted. The court provides supervised protections for Rhode Island businesses so they can remain operational, access new working capital, and pay debts. This innovative program was created by the Rhode Island Superior Court working in collaboration with members of the state’s bar.
Under a framework established by Administrative Order No. 2020-04 of the Superior Court, the program provides temporary relief to businesses until such time as they can access working capital and pay their debts. The Program is different from a traditional liquidating receivership because the court uses a non-liquidating receivership model, which keeps the business and its assets intact and allows the business owner to operate and remain in control of the company during the receivership and the operating plan. A judge sitting on the Superior Court Business Calendar appoints a non-liquidating receiver to oversee the preparation of an operating plan for businesses in the program and the business’ operations. Once new working capital, such as disaster relief or small business assistance, is accessed by the business, it will be able to maintain operations, address its debts, and begin to generate revenues again.
Besides Rhode Island, the First Judicial District of Pennsylvania Court of Common Pleas of Philadelphia County has adopted a similar plan, titled the Commerce Court Temporary Financial Monitor Program.