đ„New Chapter 11 Bankruptcy Filing - Central Falls Detention Facility Corporationđ„
Back on July 10, 2026, Central Falls Detention Facility Corporation (the âdebtorâ) filed a prearranged chapter 11 bankruptcy case in the District of Rhode Island (Judge Dorsey).* The public corp. debtor owns and operates the Donald W. Wyatt Detention Facility in Central Falls, Rhode Island (the âcityâ), which can house up to 782 detainees awaiting trial or sentencing, for which it receives $180.97 per detainee per day, and employs 251 staff and correctional officers.
Unfortunately for the debtor, it historically has not housed at its maximum capacity:
Getzler Henrich & Associates LLCâs Daniel Polsky, the debtorâs financial advisor and first day declarant, tells us that the debtor has only averaged ~675 detainees over the last five years because of the â⊠practical limitations relating to the inflow and outflow of detainees from the Facility âŠâ
The debtorâs bondholders must not lover that. To fund renovations to build up to that unused capacity, the debtor issued ~$106.4mm in secured bonds in 2005 . Bonds, which as of the petition date, currently have ~$97.3mm in principal and ⊠*gulp* ⊠another $71.8mm in unpaid interest outstanding. Theyâve been in default since â14.** Beyond that, the debtor also owes âlocal impact feesâ to the city, although it hasnât been paying very much of that â since â15, itâs forked over a grand total of ~$516k.
Finally, litigation. In this case, itâs fortunately not the kind weâre used to seeing in prisoner/detainee bankruptcies. Anyway, there is:
đData Security Incident Class Action. A July â24-filed putative class action relating to a November â23 ransomware attack on the Debtorâs IT infrastructure, which (i) resulted in info about ~18.5k former and current detainees, employees, and vendors being leaked onto the dark web and (ii) will be treated under the debtorâs proposed plan. Subject to the right for each claimant to opt out, each will receive up to ~$4k in actual damages and time,** credit monitoring services, $2k for the named plaintiff, and $90k for the classâs lawyers, and
đUMB Federal Court Litigation. An April â19 lawsuit brought by the bondâs trustee, UMB Bank, N.A., which sought a receiver*** and alleging various breaches (contract, the Rhode Island governing the debtor) and relates to an alleged attempt by the city and state to dissolve the debtor and close the facility.
However, after mucho pow-wowwing among the debtor, âconsenting creditorsâ holding ~71.2% of the bonds (the âconsenting creditorsâ), and the city, the parties agreed on a deal and a restructuring support agreement (the âRSAâ), which provides:
đNew Bonds. Holders of the bonds will receive their pro rata share of two slugs of secured bonds. The first, for $27.5mm and due June â37, will bear interest at 7.25% and start amortizing in June â27 (the âseries A bondsâ). The second, for $40mm and due March â43, will bear interest at 1.5% and also start amortizing in June â27, but in each case, payments will only be made out of excess cash flows (the âseries B bondsâ)
đCity. The city will receive (i) $250k in annual local impact fee payments, paid monthly, so long as the series A bonds are current, (ii) 5% of any excess cash flow remitted to pay the series B bonds, (iii) a $25k annual donation from the debtor â⊠for public safety, public health, or workforce development as recommended by the City and approved by the Reorganized Debtor,â and (iv) â⊠reimbursement from the Reorganized Debtor for up to $400,000 for community amenities identified by the City and approved by the Reorganized Debtor.â
đOther Claims. Reinstated and paid in full. All of them. Including any data breach litigants that opt out of the settlement.
đEquity. A non-issue. As a public corporation, the debtor doesnât have any equity holders.
Seem great? Seems great. Hard to see how anything could get in the way of the reorg. In fact, the debtor already has an official ask to approve its disclosure statement, and the RSA requires the debtor to confirm their plan by October 8, 2026 and exit chapter 11 within 30 days after that, all of which seems reasonable and realistic.
Notwithstanding that fact, the first day hearings were loooooooooooooong. Yes, hearings. We werenât sure what was up with that, but then we tuned in ⊠and learned you can thank the US trustee. Oh, and Judge Dorseyâs apparent readiness to entertain any and all of her âissuesâ and build an extensive record before granting ordinary course first relief.
So ~3.5 hours later, đ, over two dates â July 13 and July 16 â the debtor got the same outcome as any other jurisdiction. The court granted the relief and scheduled the second day hearing for August 20, 2026 at 10am ET.
The debtor is represented by Troutman Pepper Locke LLP (Jonathan Young, Hanna Redd, Aaron Smith) and Partridge Snow Hahn, LLP (Daniel Burgoyne, Matthew Lopes, Jr.) as legal counsel and Getzler Henrich & Associates, LLC (Daniel Polsky) as financial advisor. UMB, as bond trustee and on behalf of the consenting creditors, is represented by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (Ian Hammel, Kaitlin Walsh, Megan Preusker) and Duffy & Sweeney, Division of Stevens & Lee (Robert Duffy, Andrew Blais) as legal counsel. The city is represented by DarrowEverett LLP (Thomas Carlotto) as legal counsel.
*Yes, Rhode Island has its own John Dorsey. No, we were not aware. RIP to the Delaware OG.
**Aggregate payments are subject to a $100k cap.
***UMB agreed to a four-year forbearance in March â15 and another in October â19.
Company Professionals:
Legal: Troutman Pepper Locke LLP (Jonathan Young, Hanna Redd, Aaron Smith) and Partridge Snow Hahn, LLP (Daniel Burgoyne, Matthew Lopes, Jr.)
Financial Advisor: Getzler Henrich & Associates, LLC (Daniel Polsky)
Claims Agent: Epiq (Click here for free docket access)
Other Parties in Interest:
Consenting Creditor Rep and Bond Trustee: UMB Bank, N.A.
Legal: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (Ian Hammel, Kaitlin Walsh, Megan Preusker) and Duffy & Sweeney, Division of Stevens & Lee (Robert Duffy, Andrew Blais)
City of Central Falls
Legal: DarrowEverett LLP (Thomas Carlotto)