The Rhode Island Superior Court has announced a new program designed to provide protection to businesses facing the economic consequences of the recent COVID-19 pandemic. According to the program, businesses that have been significantly disrupted can apply for receivership-like protection. That protection will enable businesses to continue their operations, access capital and pay what debts they can, rather than shut down.
The Business Recovery Plan differs from a traditional receivership because the business is not sold for the benefit of creditors. Instead, the plan is a “Non-Liquidating Receivership” where the Court is able to provide protection to a business to give it time to resume operations. This court-supervised protection includes protection from lawsuits and other creditor actions for a period of time.
In order to qualify for the plan, a business must have been paying its debts in the usual course of business prior to January 15, 2020, but cannot pay debts thereafter due to the COVID-19 crisis. To proceed, a qualifying business must file a Verified Petition in the Superior Court. The business must also develop an “Operating Plan” that shows how the business can recover and begin paying its debts.
According to information released by the Superior Court, a business must be represented by counsel, subject to “very limited exceptions.” The petition will be handled by the Court’s Business Calendar in the Providence County Superior Court. However, businesses located in Kent, Washington and Newport counties should file in the county where that business is located, and those matters will be referred to an “Out-County Business Calendar.”
For more information on this unique program, or for assistance with a Petition under the Business Recovery Plan, please contact our office today.