Potential applications of small rotorcraft unmanned aerial vehicles (UAVs) range from military missions to exploration of the planet Mars (Patrick C. O’Brien, 2003). Tasks such as exploration of unknown territories, formation flying, intelligence gathering etc, require UAV to be capable of flying very close to other flying or steady objects. Exposed rotary wings limit rotorcraft vehicle’s capability to fly in proximity of other objects. In some applications, such as rescue operation, urban warfare etc, it is highly desirable to cover exposed blades of rotorcraft UAV. This thesis work proposes a testbed for a mini rotorcraft UAV with protective shroud to demonstrate the capability of a rotorcraft to continue its flight after an impact with other object in environment, e.g. building wall. The quadrotor configuration is considered as a base vehicle for the testbed. A protective shroud for base vehicle is designed and built to protect rotors against the impact with wall. A closed loop attitude stability controller is developed and tested to ensure the stability of vehicle against high frequency vibrations from the rotors and disturbances from the impact. Experiments are carried out to prove the stability of the quadrotor vehicle after an impact with a building wall.