Central Falls receiver tells bankruptcy judge status quo unsustainable

Lawyer for fire, police retirees questions filing

By Erika Niedowski
Associated Press / August 4, 2011

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PROVIDENCE - The state-appointed receiver overseeing cash-strapped Central Falls began yesterday to lay out in federal court the case for the city’s municipal bankruptcy and offered a glimpse of its planned way out.

Theodore Orson, attorney for receiver Robert G. Flanders, said Flanders intends to “fix Central Falls’’ because the status quo is “unsustainable and unacceptable.’’

Orson began by noting to federal Judge Frank Bailey the steps the receiver took to avoid bankruptcy. Flanders filed for bankruptcy Monday on behalf of Central Falls. He has asked the court to void the city’s collective bargaining agreements and employment contracts.

Attorneys for Central Falls police and firefighters and city retirees also attended the hearing.

Flanders has said he would like the bankruptcy to be over within six months, but it could take much longer if retirees and union members fight cuts in court.

Orson said he wants to file a consensual plan of recovery to the court within 30 days, agreed to by municipal workers and retirees. But he challenged those groups to offer their own plan, if they have one. He said it must be realistic, feasible, and sustainable.

“One thing we are not is Peter Pan,’’ Orson said. “We can’t spread angel dust’’ and fix the city’s finances by spending more than it brings in.

During a recess in yesterday’s hearing, Flanders said he’s interested in hearing alternative proposals from city retirees and workers.

“If somebody can come up with a better suggestion, we’re all ears,’’ Flanders said. “None of us wants to linger here one day longer than we have to. The more fights we have about issues, the more delay is brought into the process.’’

Central Falls must find $5.6 million to balance its budget this fiscal year. Flanders is proposing to save $2.5 million through cuts to pensions and health care benefits. The rest would have to come from elsewhere.

Flanders said significant cuts to police and fire budgets are under consideration.

Matthew McGowan, an attorney representing retired police officers and firefighters, questioned the validity of the bankruptcy filing.

He said the law required negotiations before Central Falls could file for bankruptcy - but none took place.

The retirees, he told the judge, were presented with an “11th-hour proposal,’’ and some were given as few as five days to decide whether to accept it.

McGowan said there is a “very real potential’’ that he will file a motion to dismiss the bankruptcy filing.