Central Falls retirees say bankruptcy not authorized

Posted 11/16/11

NEW YORK - Retired police and firefighters from the City of Central Falls filed papers contesting the city’s right to file for Chapter 9 municipal bankruptcy.

The retirees contend the city’s receiver, former state Supreme Court Justice Robert G. Flanders Jr., didn’t satisfy one of the conditions to a Chapter 9 filing because he did not negotiate in advance “in good faith.”

The retirees anticipate the receiver, appointed before the bankruptcy filing, will contend that negotiations would have been “impracticable.” To counter the argument, the retirees argue that Flanders has “failed to articulate how or why” negations were essentially impossible.

The receiver filed a proposed debt adjustment plan for the city in September. The plan is not intended to affect bondholders. For details on the proposal, click here for the Sept. 23 Bloomberg bankruptcy report.

The city, population 18,000, filed for municipal reorganization under Chapter 9 on Aug. 1. Along with the petition, Flanders filed papers to terminate three union contracts.

The case is In re City of Central Falls, 11-13105, U.S. Bankruptcy Court, District of Rhode Island (Providence).

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