Business Excellence Awards
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PHILADELPHIA – Providence probably will seek bankruptcy-court protection to deal with a budget deficit, Robert Flanders, the state-appointed receiver for nearby Central Falls, said last week in a Bloomberg News report.
“I don’t see how they can get out of it without going there,” said Flanders, a former state Supreme Court justice and a partner at Hinckley, Allen & Snyder LLP. He put Central Falls into bankruptcy in August and has used the city’s legal status to tear up contracts with city workers and cut pension benefits.
Providence Mayor Angel Taveras has put pressure on Brown University and other nonprofit organizations to help close a budget gap of at least $20 million, while Gov. Lincoln D. Chafee is pressing lawmakers for action on measures to help communities curb pension costs. Unsustainable retiree expenses helped push Central Falls into insolvency. Moody’s Investors Service cut Providence debt a step to Baa1, third-lowest investment grade, last week, citing its “strained” finances.
“Bankruptcy is not the preferred option for restoring Providence’s fiscal health; it is the last option, and I will do everything in my power to prevent it from happening,” Taveras said in a statement, in response to Flanders’ remark. “I respectfully disagree with Judge Flanders that bankruptcy is unavoidable.” •