Central Falls, R.I., disclosure statement OK'd; plan hearing Sept. 6

By Caroline Salls

Pittsburgh, July 27 - The City of Central Falls, R.I.'s disclosure statement for its fourth amended Chapter 9 plan of adjustment of debts was approved Friday by the U.S. Bankruptcy Court for the District of Rhode Island.

The plan confirmation hearing is scheduled for Sept. 6.

Central Falls said in the disclosure statement that the proposed plan "will restructure the city's debt and its operations and put the city on a path toward fiscal stability."

According to the disclosure statement, the amended plan also addresses and resolves the city's obligations to current and former employees; the city's obligation to pay pension benefits and to pay for other post-employment benefits for its current and future retirees; the claims of former employees who were not paid the full amount of accrued sick time and other benefits; the claims arising from tort and breach of contract lawsuits; and various other trade and vendor claims.

Central Falls said the amended plan does not impair the city's bond obligations.

Creditor treatment

Treatment of creditors will include the following:

• Administrative claims holders will be paid in full;

• Principal and interest on general obligation school bond claims and G.O. municipal facility bond claims will be paid via property tax proceeds;

• The term of the city's April 10, 2009 rescue lease will be extended by two years, the annual principal payments will be reduced by 50% and the annual interest rate will be reduced by 1%;

• Retiree health insurance claims holders' health care benefits will be modified and they will be required to pay 20% co-share premium payments;

• Retiree accidental disability claims holders' benefits will be modified;

• Retiree pension claims holders' annual pension benefits will be reduced by less than 55% in accordance with the formula set under the newly designed Central Falls Pension Plan, except for retiree $10,000 and under pension claims, which will not be reduced, and retiree reduced 45% pension claims, which will be reduced by 55%;

• Employees covered by collective bargaining agreements with Local 1485, International Association of Fire Fighters, AFL-CIO, the Fraternal Order of Police, Lodge 2 and R.I. Council 94, AFSCME, AFL-CIO Local 1627 will have their compensation, health and other benefits reduced, while firefighters and police will also see their retirement benefits reduced;

• General unsecured claims holders will receive their share of the $600,000 pool during the six-year plan duration after distributions are made to or reserves are created for the holders of convenience unsecured claims;

• The State of Rhode Island's claims will be paid in full, but most of the distribution will be paid after the term of the plan; and

• General unsecured convenience claims holders will recover 35% in one lump-sum payment by June 30, 2013.

Central Falls filed for bankruptcy on Aug. 1, 2011 under Chapter 9 case number 11-13105.

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