Central Falls, R.I., says court lacks jurisdiction to end receivership

By Caroline Salls

Pittsburgh, May 18 - The City of Central Falls, R.I., is asking the U.S. Bankruptcy Court for the District of Rhode Island to strike the city council's motion to terminate Central Falls' state receivership, according to a May 18 court filing.

The city, through state-appointed receiver Robert G. Flanders Jr., said in the motion that "the bankruptcy court lacks subject-matter jurisdiction to interfere with state and local governance."

Since Rhode Island General Laws say that the state's director of revenue can terminate a municipal receivership at any time, Flanders said the termination of receivership is a state function, not a federal function.

As previously reported, the city council asked the court to "dismiss and discharge" the city's receiver on May 4.

"By the time of the hearing on this motion, the receiver will have over-stayed its time limit as a change in the form of government as expressed by the Rhode Island Supreme Court," the council said in the motion.

The council said the two-year time limit will expire on July 16 at the latest.

As a result, the city council said the bankruptcy court should discharge the receiver, order it to file a final interim account and report, "vacate and surrender the offices of government" and prohibit it from taking any more actions related to Central Falls' government.

"If the receiver overstays its authority, it is akin to the loss of liberty contemplated in the compensation awarded in a civil false imprisonment," the council said.

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

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