The Rhode Island Superior Court’s recently implemented COVID-19 Business Recovery Plan allows businesses to seek judicial assistance to restructure their obligations and operations relative to the pandemic.
If COVID-19 has impacted your organization and you need:
- A court-approved plan that allows your businesses to stay open while satisfying its debts and other obligations, then consider the Rhode Island Superior Court’s Business Recovery Plan.
If so, the Business Recovery Program is specifically designed to assist small and family-owned business, as well as non-profits, sustain during the COVID-19 crisis.
Business Recovery Plan
On March 31, 2020, Administrative Order No. 2020-04 was signed into effect by Presiding Justice Gibney creating the COVID-19 Business Recovery Plan. Under this plan, the court will supervise and provide important protections for Rhode Island businesses to allow them to continue operations, pay debts and access new working capital. This is accomplished by the establishment of a court-approved operating plan. The program will utilize a non-liquidating receivership model, which allows business to stay in operation and keep retain their assets.
In order to be eligible for the COVID-19 Business Recovery Plan, business entities or sole proprietorships must verify in their petition that:
- The business was not in default of its financial obligations as of 1/15/20;
- The business experienced a reduction in its gross revenues of at least 20% during any sixty 60 operating period beginning 1/15/20 as compared to similar period prior to 1/15/20;
- The petitioner must certify that COVID-19 created an adverse impact on business operations resulting from a governmental and/or regulatory mandated partial or complete closure or substantial interruption of cash flow after 1/15/20 due to the COVID-19 crisis.
Once approved for the business recovery plan, a receiver will be appointed for the business in order to create an operating plan to allow for the business to continue to function while satisfying debts and other obligations, as able. It is important for business to obtain new capital, through the CARES Act or other SBA programs as explained above, to allow the businesses to continue their operations during this time of crisis.
For more information
This update was written by Greg N. Hoffman and C. Alexander Chiulli. For questions or additional information about how the Rhode Island Business Recovery Plan can help your organization, please contact Greg or Alex at 401-273-7171 for assistance during these uncertain times.
Barton Gilman provides experienced and innovative legal advice on every facet of small business and nonprofit formation, governance, financing and operations. We regularly assist our clients with employment matters, contracts, compliance with state and federal statutes, trademark and intellectual property, bylaws and policies, and liability claims.