Rhode Island City Files for Bankruptcy Protection

Rhode Island City Files for Bankruptcy Protection

The city of Central Falls, R.I., battered by debt and years of financial woes, has filed for bankruptcy protection.

Central Falls has Rhode Island's highest unemployment rate - about 15 percent - and the state's lowest per-capita income, data indicate. It made headlines last year when its under-performing high school fired, then rehired, its entire faculty.

"The current situation is dire," said Gov. Lincoln Chafee when announcing the bankruptcy filing, "and it necessitates decisive steps to put the city back on the path to solid financial footing and future prosperity."

The city of 19,000 is on track to end the fiscal year next June 30 with a $5.6 million deficit, based on projected revenues of $16.4 million and projected expenses of more than $22 million, court filings reveal.

Chapter 9 bankruptcy is reserved for municipalities as a reorganizational bankruptcy, during which the municipality or the debtor can restructure its debts to its creditors.

Many other cities and towns across Rhode Island and the country are watching what happens next.

Read more articles about consumer debt by Ted Connolly, co-author of The Road Out of Debt

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Anonymous
  • 09-08-2011

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