Businesses that have been negatively affected by COVID-19 and are considering closing operations permanently may now seek temporary protection under the COVID-19 Receivership Program overseen by Rhode Island Superior Court. The plan allows businesses to resume and/or continue operations in accordance with a Court-approved Operating Plan. With protection, businesses have more time to gain access to working capital such as a Paycheck Protective Program (PPP) loan or from other disaster assistance, address debt repayment, and be ready to begin to generate revenue once the Governor removes the restrictions on businesses and individuals.
The permanent closing of businesses harms the state’s economy, and the program was established to help preserve economic investment and jobs in our state. It is a collaborative effort between the courts and the Rhode Island Bar, and is a temporary relief program to help businesses stabilize and get back on their feet by using a non-liquidating receivership model.
A business or sole proprietorship may be eligible to be considered for the COVID-19 Receivership Program and the appointment of a Temporary Non-Liquidating Receiver for the program if they can verify that their business:
- was not in default of its financial obligations as of January 15, 2020
- experienced a reduction in gross revenue of at least twenty (20%) percent during any sixty (60) day operating period beginning January 15, 2020, as compared to a similar operational period prior to January 15, 2020; or
- was forced to cease a substantial portion of its operations due to any governmental or regulatory order at some time after January 15, 2020; or
- demonstrate that the COVID-19 Pandemic created an adverse impact on their business operations resulting from either a government and/or regulatory mandated partial or complete closure, or a substantial interruption of cash flow occurring after January 15, 2020, attributable to the COVID-19 Pandemic, which would have been utilized to fund ongoing business operations and, as a result, their business cannot continue and/or resume operations and pay its debts as they become due in the usual course of business.
For more details about the COVID-19 Receivership Program, please visit www.courts.ri.gov and review the posted material, or contact your attorney.