Year of filing: 2011
Central Falls, the smallest city in the state of Rhode Island, filed for Chapter 9 bankruptcy in August 2011.
The Central Falls economy began its decline in the 1970s with the departure of textile manufacturers, and between 1997-2000, at least 11 textile plants closed. In addition to the declining economy, the city had $80 million in pension obligations and retiree health benefits on its books, many of which were promised to police officers and firefighters. During this time, the city was significantly underfunded, with an annual budget of $17 million for these benefits, pushing it tofile for bankruptcy. As part of a restructuring, pensions were slashed, staff were laid off, library funds were cut and the city closed a community center.