Central Falls Detention Facility Corporation - Chapter 11 Plan Terms

Plan Terms

Overview

• Central Falls Detention Facility Corporation, as debtor and debtor-in-possession (the “Debtor”), proposes a Plan of Reorganization (the “Plan”) pursuant to section 1121 of the Bankruptcy Code, of which it is a proponent within the meaning of section 1129 of the Bankruptcy Code.
  • The Debtor operates the detention facility known as The Donald W. Wyatt Detention Facility and related training facility (the “Facility”).
  • The Petition Date is July 10, 2026.
• The Plan is being proposed in accordance with, and in furtherance of, the Restructuring Support Agreement (the “RSA”).

Restructuring Support Agreement

• The RSA, dated as of June 19, 2026, is by and among the Debtor, the Consenting Holders, and the City of Central Falls, Rhode Island (the “City”).
  • The “Consenting Holders” are the Holders of Existing Bond Secured Claims that are a party to the RSA.
  • “Required Holders” means Consenting Holders representing (x) 66.67% of the aggregate outstanding principal amount of Existing Bond Secured Claims and (y) 50% in number of total holders of Existing Bond Secured Claims.

Global 9019 Settlement

• The Plan embodies and implements a comprehensive settlement and compromise among the Debtor, holders of a majority in principal amount of the Existing Bonds, and the City, related to a number of issues affecting the Debtor and the Facility (the “Global 9019 Settlement”), centered on resolving:
  • The Debtor’s obligations associated with its senior secured indebtedness, the Existing Bonds, which have been in default for over ten years; and
  • The Federal Court Litigation and the City’s claims for impact fees that have gone unpaid for years given the Debtor’s financial condition.
• The terms of the Global 9019 Settlement are set out in the RSA and incorporated by reference into the Plan, constituting an integrated and global good faith compromise and settlement of all Claims and controversies relating to the contractual, legal, and subordination rights that a creditor may have with respect to any Allowed Claim or distribution on account thereof. The settlement is comprised of:
  • The classification and treatment of the Existing Bond Secured Claims specified in the Plan;
  • The classification and treatment of the City Claims specified in the Plan;
  • The resolution of the Data Security Incident Class Settlement Claims; and
  • The general treatment of all other Allowed Claims to render them unimpaired.
• The Global 9019 Settlement permits payment in full of General Unsecured Claims, including trade creditors, and is premised on a Plan outcome that resolves or otherwise mitigates all known Claims against the Debtor and re-sets the Debtor’s balance sheet and liabilities.
  • Essential and mandatory terms include the release and exculpation provisions by and in favor of the Debtor, the Reorganized Debtor, the Bond Trustee, the Consenting Holders, the City, and each of their Related Parties.
• The Plan shall constitute a motion to approve the Global 9019 Settlement, and, subject to the occurrence of the Effective Date, entry of the Confirmation Order shall constitute the Bankruptcy Court’s integrated and global approval of the settlement pursuant to Bankruptcy Rule 9019.
  • If the Effective Date does not occur, the Global 9019 Settlement shall be deemed withdrawn without prejudice to the respective positions of the parties.

Treatment of Claims

• Only the votes of Holders of Class 3 Claims and Class 4 Claims shall be solicited with respect to the Plan.
• Class 3 — Existing Bond Secured Claims:
  • Deemed Allowed in the aggregate principal amount of $97,300,000, plus accrued and unpaid interest through the Petition Date, plus any accrued and unpaid fees and expenses of the Bond Trustee and its professionals arising under or in connection with the Existing Bond Documents.
  • Secured by valid, binding, and perfected first priority liens and security interests in (i) the Revenues and all Funds and Accounts created or maintained pursuant to the Existing Indenture, and (ii) the Mortgaged Property.
  • Each Holder shall receive its Pro Rata share of the Series 2026 Bonds on the Effective Date or as soon as practicable thereafter, and any deficiency claim in respect of the Existing Bond Secured Claims shall be deemed waived as of the Effective Date.
  • Class 3 Claims are Impaired and entitled to vote.
• Class 4 — City Claims:
  • Deemed Allowed in the aggregate amount of $1.00 as of the Effective Date, in exchange for which the City shall receive the terms set forth in the City Settlement.
  • Class 4 Claims are Impaired and entitled to vote.
• The remaining Classes are Unimpaired, conclusively presumed to have accepted the Plan under section 1126(f), and not entitled to vote: Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 5 (Unsecured Litigation Claims, including Data Security Incident Class Opt-Out Claims), Class 6 (Data Security Incident Class Settlement Claims), and Class 7 (General Unsecured Claims). Each Holder of an Allowed Class 7 Claim shall receive, at the Debtor's or Reorganized Debtor's option with the consent of the Bond Trustee, either payment in full in Cash or Reinstatement.

New Bonds and Restated Bond Documents

• On and following the Effective Date, pursuant to the Global 9019 Settlement, the Existing Bond Documents shall be amended and restated as the Restated Bond Documents, and the Reorganized Debtor shall issue the Series 2026 Bonds under the Restated Indenture, comprising:
  • New Series 2026A Bonds: $27.5 million in face amount, bearing interest at a fixed rate of 5% per annum, secured by a first priority lien on all assets of the Reorganized Debtor, subject to Permitted Encumbrances.
  • New Series 2026B Bonds: $40 million in face amount, bearing interest at a fixed rate of 1.5% per annum, secured by a first priority lien on all assets of the Reorganized Debtor, subject to Permitted Encumbrances. Payments consist of:
    • Annual interest payments each March 15 commencing March 15, 2027, payable solely from Excess Cash Flow; if Excess Cash Flow is insufficient, such interest shall remain due and payable but shall not accrue interest, and the failure to pay it due to insufficiency shall not be an Event of Default under the Restated Indenture; and
    • Annual principal payments each March 15 commencing March 15, 2027, solely from Excess Cash Flow then on deposit in the Series 2026B Redemption Account.
• The Existing Bonds are the Detention Facility Revenue Refunding Bonds (The Donald W. Wyatt Detention Facility), Series 2005A, issued in the principal amount of $106,380,000. UMB Bank, N.A. serves as Bond Trustee under the Existing Indenture, and Argent Trust Company will serve as New Bond Trustee under the Restated Indenture on and after the Effective Date.
• The Liens and security interests securing the Existing Bond Secured Claims shall secure the Reorganized Debtor’s obligations under the Restated Bond Documents as valid, binding, perfected, and enforceable first-priority Liens not subject to avoidance, recharacterization, or subordination.
• If all or any portion of the Project is sold, disposed of, licensed, or otherwise transferred after the Series 2026B Bonds mature but before twenty years after the Effective Date, and any interest or principal was unpaid on the maturity date, the net proceeds from the Project Sale shall be remitted to the Trustee for application to unpaid accrued interest and principal on the Series 2026B Bonds until paid in full.
• The offer, issuance, and distribution of the Series 2026 Bonds to Holders of Existing Bond Secured Claims shall be exempt from registration requirements under the Securities Act and any state or local law, pursuant to Section 1145 of the Bankruptcy Code and/or one or more other applicable exemptions.
• On the Effective Date, after payment of all amounts properly payable from the funds held by the Bond Trustee on account of the Existing Bonds (including the fees and expenses of the Bond Trustee and its legal and financial advisors), any remaining balances held by the Bond Trustee shall be used to fund the Accounts established under the Restated Bond Documents as follows: (i) $2,750,000 to the Debt Service Reserve Fund; (ii) $4,000,000 to the Capital Reserve Fund; (iii) $7,000,000 to the Operating Reserve Fund; and (iv) the remainder to the Revenue Fund.

City Settlement

• On and after the Effective Date, in full and final satisfaction of all City Claims and as part of the Global 9019 Settlement, the City shall receive:
  • Local Impact Fee: an annual fee of $250,000, payable in regular monthly installments, subordinated to the payment of debt service on the New Series 2026A Bonds.
    • In connection with the execution of the RSA, the Debtor made a $250,000 payment to the City for the period of July 1, 2025 through June 30, 2026.
    • To the extent the Effective Date occurs after July 31, 2026, the Reorganized Debtor shall make additional monthly payments so that the City receives $250,000 in Local Impact Fees for the period of July 1, 2026 through June 30, 2027, to the extent not already made by the Effective Date.
    • The fee shall be paid so long as scheduled payments to the New Bond Trustee on account of the New Series 2026A Bonds are current and there is no Event of Default under the Restated Bond Documents.
  • Excess Cash Flow Payments: five percent (5%) of Excess Cash Flow as and when remitted to the Bond Trustee for redemption of the New Series 2026B Bonds.
  • Annual Charitable Donation: a budgeted $25,000 annual charitable donation to federally tax-exempt nonprofits providing services in the City for public safety, public health, or workforce development, as recommended by the City and approved by the Reorganized Debtor (such approval not to be unreasonably withheld).
  • Effective Date Fee: within the first twelve (12) months following the Effective Date, reimbursement of up to $400,000 for community amenities identified by the City and approved by the Reorganized Debtor (such approval not to be unreasonably withheld).
• On and after the Effective Date, the City will not hinder or delay the Reorganized Debtor’s operation of the Facility consistent with the Debtor’s existing practices or its performance of contractual obligations relating to the detention of persons at the Facility, and the Reorganized Debtor shall continue to operate the Facility in compliance with applicable laws and regulations, including procurement rules that encourage consideration of City-based and other underrepresented vendors.
• As soon as reasonably practicable following the Effective Date, the Reorganized Debtor, Bond Trustee, and the City shall jointly file a Stipulation of Dismissal of the Federal Court Litigation — captioned UMB Bank, N.A. v. City of Central Falls, et al., Case No. 19-182 — with prejudice, without costs, and with all rights of appeal waived.

Data Security Incident Class Settlement

• Subject to Bankruptcy Court approval, the Data Security Incident Class Settlement resolves all Data Security Incident Class Settlement Claims arising from the targeted cyberattack on the Debtor’s computer systems on or about November 2, 2023, which is the subject of the putative class action captioned Jacob Hellested v. Central Falls Detention Facility Corporation d/b/a Donald W. Wyatt Detention Facility, Case No. 24-00284.
• The settlement is funded through a Data Security Incident Class Settlement Fund totaling no more than $100,000, funded by the Debtor on the Effective Date, from which:
  • Each Holder that suffered losses fairly traceable to the Data Security Incident may claim (a) up to $5,000 in actual, documented losses, and (b) up to four (4) hours of time spent responding to the incident, compensated at $20/hour, up to a maximum aggregate cost to the Debtor of $100,000, payable solely from the Fund on a claims-made basis.
  • Jacob Hellested, the named plaintiff, may seek an incentive fee of $2,000.
• In addition, subject to Bankruptcy Court approval:
  • Each Holder shall be offered five (5) years of one-bureau free credit monitoring, with the Debtor or Reorganized Debtor paying the costs of that monitoring as well as the costs of notice and claims administration.
  • The Debtor or Reorganized Debtor shall fund up to $90,000 in attorneys’ fees and costs incurred by the plaintiff in connection with the class action.
  • The Fund and the amounts for credit monitoring and attorneys’ fees shall be funded by the Debtor into escrow on the Effective Date pending Bankruptcy Court approval.
• Any amounts not paid or payable to Holders from the Fund, as well as uncashed checks, shall revert to the Reorganized Debtor free and clear of all Data Security Incident Class Settlement Claims.

Releases

• The “Released Parties” and the “Releasing Parties” each comprise (i) the Debtor and its Estate; (ii) the Reorganized Debtor; (iii) the Consenting Holders; (iv) the Bond Trustee; (v) the City; and (vi) all Related Parties of each of the foregoing.
• As of the Effective Date, pursuant to section 1123(b) of the Bankruptcy Code, the Released Parties are conclusively, absolutely, unconditionally, and irrevocably released and discharged by the Releasing Parties from any and all Claims, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities relating to, among other things, the Chapter 11 Case, the Debtor, the RSA, the Definitive Documents, the Existing Bond Documents, the Existing Bonds, the Cash Collateral Orders, and the formulation and implementation of the Plan.
  • Excepted are the right to enforce the Plan and rights or obligations arising under the Definitive Documents that remain or become effective after the Effective Date, or as otherwise provided in the Plan or Confirmation Order.
  • The releases apply only to the maximum extent permitted by law and shall not release any Released Party from Claims or Causes of Action arising from an act or omission judicially determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence, nor release any post-Effective Date obligations under the Plan, the Confirmation Order, any Restructuring Transaction, any Definitive Document, or the Restated Bond Documents.
    • Actual fraud shall not exempt from the scope of the releases any Claims or Causes of Action arising under sections 544 or 548 of the Bankruptcy Code or state laws governing fraudulent or otherwise avoidable transfers or conveyances.

Exculpation

• The “Exculpated Party” means the Debtor, the Reorganized Debtor, the Bond Trustee, the Consenting Holders, and any of their present or former officers, directors, employees, advisors, attorneys, agents, successors, or assigns.
• Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur liability for any Cause of Action related to any act or omission in connection with the Chapter 11 Case and the negotiation and implementation of the Plan from the Petition Date through the Effective Date, except for Claims or Causes of Action judicially determined in a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
  • The Exculpated Parties shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities, and are deemed to have participated in good faith and in compliance with applicable law with regard to the solicitation and distribution of consideration pursuant to the Plan.

Injunction

• In addition to any injunction provided in the Final DIP Order, and except as otherwise expressly provided in the Plan or for required distributions, all Entities holding Claims that have been released, discharged, Disallowed, or subject to exculpation are permanently enjoined, from and after the Effective Date, from taking any of the following actions against the Debtor, the Reorganized Debtor, the Released Parties, and/or the Exculpated Parties, or the property to be distributed under the Plan:
  • Commencing or continuing any action or proceeding on account of such Claims;
  • Enforcing, attaching, collecting, or recovering any judgment, award, decree, or order;
  • Creating, perfecting, or enforcing any Lien or encumbrance;
  • Asserting any right of setoff, subrogation, or recoupment, unless such right to setoff arises under a post-petition agreement with the Debtor or an executory contract or unexpired lease assumed by the Debtor as of the Effective Date; and
  • Commencing or continuing any action with respect to any such Claims released, settled, treated, entitled to a distribution, or cancelled pursuant to the Plan.
• Such persons shall not be precluded from exercising their rights and remedies, or obtaining the benefits, solely pursuant to and consistent with the terms of the Plan.

Discharge

• Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Definitive Documents, the Plan, or a related document, the distributions, rights, and treatment provided in the Plan shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of all Claims and Causes of Action of any nature against the Debtor, whether known or unknown, that arose before the Effective Date.
  • The Confirmation Order shall be a judicial determination of the discharge of all Claims, subject to the Effective Date occurring.

Conditions Precedent, Modification, and Support

• Conditions precedent to the Effective Date include that:
  • The RSA shall not have been terminated and shall remain in full force and effect;
  • Each document constituting the Definitive Documents shall have been executed and remain in full force and effect, in form and substance reasonably acceptable to the Debtor, the Bond Trustee, and the Consenting Holders and consistent with the RSA;
  • All conditions to the effectiveness of the Restated Bond Documents shall have been satisfied or waived, the Restructuring Transactions shall have been consummated, and the Restated Bond Documents shall be in full force and effect; and
  • The Bankruptcy Court shall have entered the Confirmation Order, which shall not have been reversed, stayed, amended, modified, dismissed, vacated, or reconsidered.
• The conditions may be waived, in whole or in part, by the Debtor or the Reorganized Debtor, only in accordance with the terms of the RSA, without notice to other parties-in-interest or the Bankruptcy Court and without a hearing.
  • If the Confirmation Order is vacated, the Plan shall be null and void in all respects, and any settlement of Claims and Causes of Action, including the Global 9019 Settlement and related releases, shall be null and void.
• The Debtor may amend, supplement, or modify the Plan at any time, subject to the requirements of the Bankruptcy Code and the terms and conditions of the RSA, and, until the Effective Date, retains the exclusive right to amend the Plan and to solicit acceptances thereof.
• The Voting Deadline is September 17, 2026, at 4:00 p.m.