The pandemic is affecting businesses like nothing before. But there is help out there.  Philadelphia businesses now have a new avenue for relief from the effects of COVID-19.  Recently, Philadelphia’s Court of Common Pleas Commerce Court announced the creation of the Commerce Court Temporary Financial Monitor Program (“Monitor Program”).  The Monitor Program aims to give businesses that are unable to pay their debts due to disruptions caused by the pandemic the opportunity to negotiate with creditors and establish plans for operations moving forward.

Since the beginning of the outbreak, many business have been forced to limit or otherwise cease operations, making it increasingly challenging to maintain revenue and pay bills.  The Monitor Program will provide needed relief to businesses that are struggling as a result of government shutdown orders, capacity restrictions, and general economic uncertainty in both the country and the Philadelphia region, and help them design strategies for future action.

The program is open to all businesses and non-profits with a principal place of business in Philadelphia County that have been unable to meet their financial obligations after March 1, 2020 as a result of operations being substantially limited due to COVID-19.  In order to enter the program, a business or non-profit must file a petition to the court detailing its financial state before and after the pandemic as well as information about creditors and the amount of money owed to these entities.  Following this initial step, the court may order a number of possible actions, including appointment of a “Temporary Financial Monitor” to work with the petitioning business and its creditors.

In 2008, the Philadelphia Commerce Court established a similar program that sought to avoid foreclosures in favor of more cooperative solutions designed by mortgage holders, lenders, and other interested parties in the wake of the national housing crisis. These programs are novel attempts by the Commerce Court – a court that since its inception in 2000 has received national acclaim and recognition – to address complicated problems.

While not all of the details surrounding the Monitor Program have been worked out, the main goal appears to be fostering collaborative solutions between businesses, non-profits and their creditors. This includes the creation of an operating plan by the Temporary Financial Monitor to enable the business to resume and/or continue operating while paying off debts, such as instituting an injunction against creditors that would prevent debt collection for a period of time.  The Temporary Financial Monitor shall be discharged within one year from the date of appointment, unless otherwise ordered by the court.

While not all entities that file a petition are guaranteed access to the Monitor Program, it is a viable option for those that have faced substantial hardship during the COVID-19 pandemic and need some extra support to get them over the hurdle.

John Reid, Law Clerk at Griesing Law, contributed to this article.

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