Philly Courts Unveil Plan To Ease COVID-19 Burden On Cos.

By Matthew Santoni
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our Commercial Contracts newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360 (June 22, 2020, 9:32 PM EDT ) The Court of Common Pleas for Philadelphia is creating a "Temporary Financial Monitor" program to help local businesses hobbled by the COVID-19 pandemic stave off creditors and get back on their feet, the court announced Monday.

Under the civil division's Commerce Court, the temporary monitors will help pandemic-stricken Philadelphia businesses come up with operating plans for moving forward and paying down their debts, in exchange for putting a temporary hold on debt-collection activities against them, Monday's order from President Judge Idee C. Fox and Commerce Court Supervising Judge Gary S. Glazer said.

"The court takes judicial notice that the COVID-19 pandemic has caused significant economic harm to local for-profit businesses and non-profit institutions, many of which were forced to close for lengthy periods of time and have been unable to generate sufficient income to pay their debts or retain their staff, and it appears that the current economic climate threatens their ability to operate in the future," the order said.

Non-profits and for-profit businesses with their principal places of business within Philadelphia can apply for the program if the pandemic rendered them unable to conduct "a substantial portion" of their operations or pay their bills after March 1, 2020 — two weeks before Pennsylvania Gov. Tom Wolf declared a statewide emergency and ordered the temporary closure of "non-life-sustaining" businesses statewide.

Judge Glazer told Law360 that, while the program was open to all businesses with their home office in Philadelphia, he hoped it would be most useful to small businesses or nonprofits like the city's museums.

"It is ideally for small, neighborhood-type businesses that have been ravaged by being closed and shut off from their usual income because of the pandemic," he said. "We are trying to save Philadelphia businesses."

The temporary financial monitors, drawn from "legal and accounting" professionals, will examine a business's finances and debts and will help come up with new plans for moving forward, the order said. Judge Glazer said he was working with the Philadelphia Bar Association and the Villanova University Charles Widger School of Law to secure volunteers who could provide expertise.

The monitors will work with the business and its creditors on strategies to resume or continue operations with a plan for repaying any debts that had built up, with such plans being shared with creditors and interested parties before being submitted to the court for approval, the order said.

"It's not litigation: It's about negotiation and mediation to get these businesses back on their feet, to buy time for them," Judge Glazer said.

When a business is part of the program, the court said it will enjoin any entities from debt collection activities except those as part of the new plans. Businesses will be required to post a nominal bond in order to participate.

Petitions to join the program will be public, though supporting statements with pre- and post-pandemic finances and debts will be sealed from public view, the order said.

The temporary financial monitor will expire after a year unless extended by the court.

While the local courts still have a pandemic-related hold on evictions and executions of judgments against debt-stricken defendants and businesses, Judge Glazer said those can't stay in place forever, so the monitor program will help participating businesses and non-profits recover.

"There is talk that it's going to be a tsunami," he said. "We really would like to reach out and get the word out to smaller businesses so they know that they don't have to drown."

--Editing by Steven Edelstone.

For a reprint of this article, please contact reprints@law360.com.

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!