BUSINESS
08/01/2011 02:56 EDT | Updated 10/01/2011 05:12 EDT

Cash-strapped RI city of Central Falls to file for bankruptcy; Gov calls city finances 'dire'

CENTRAL FALLS, R.I. - The state-appointed receiver overseeing the cash-strapped Rhode Island town of Central Falls is filing for bankruptcy on the city's behalf in an effort to help it get back on its financial feet.

Receiver Robert G. Flanders announced the step at City Hall on Monday. He was joined by Gov. Lincoln Chafee (CHAY'-fee) who says the move is needed to address Central Fall's "dire" finances.

Flanders had earlier indicated that filing for Chapter 9 bankruptcy protection in federal court might be the only option unless municipal retirees and city workers made major voluntary concessions. Flanders has no power to impose cuts, but officials say a bankruptcy judge could order pensions modified and union contracts voided.