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PLATTSBURGH — Beset by financial woes, Pyramids Child Development Center will be closing, disrupting child-care and special-needs services for hundreds of local families.

The move comes after a judge Wednesday removed the protection of Chapter 11 from the center, freeing creditors to seek debts owed by Pyramids.

"We are all deeply saddened by this turn of events," Pyramids Executive Director Melissa Dorsett-Felicelli said in an e-mail to the Press-Republican.

"The employees of Pyramids Child Development Center are a wonderful group of people, as are the families and children we have served over the years."

The school is closed this week for vacation and will not re-open come Monday.

ABOUT 200 KIDS SERVED
The center provides child care for area families and services for children with special needs at its Route 22B location at the former St. Alexander's School building in Morrisonville.

About 100 children are served at the school and another 24 in off-site classrooms.

Pyramids, which has about 85 employees, also serves about 75 children throughout Clinton, Essex and Washington counties.

The center opened in 2003 and was hailed as an innovative, state-of-the-art facility.

SUED COUNTY
Counties are required to provide services for special-needs students under state law, and Pyramids is one of the providers that Clinton County hired for the job.

But in 2004, Pyramids sued Clinton County, charging that the county retaliated against the center and wrongfully gave business to competitors.

The case was dismissed by a state court and then a federal court, but after a third appeal by Pyramids, a U.S. Court of Appeals judge ruled that the center could continue to pursue its case against the county.

BANKRUPTCY PROTECTION
Then, in November 2007, Pyramids workers picketed Champlain National Bank's Route 3 location in Plattsburgh after not receiving paychecks for four weeks.

The bank had frozen the center's assets after Pyramids failed to make loan payments.

Shortly after the pickets, the center sought and received protection under Chapter 11 in order to re-organize financially.

This April, the court-appointed trustee of Pyramids' Chapter 11 proceeding requested the case be dismissed, citing among other items "gross mismanagement of the estate."

On Wednesday, the U.S. Bankruptcy Court Northern District of New York's Albany Division granted the trustee's request and dismissed the Chapter 11 case.

PYRAMIDS DEBT
Court records show that Pyramids owes the federal government nearly $400,000 in tax withholdings from 2008 that it has not paid.

It also owed the county about $29,000 for overpayment for services, according to Richard H. Weiskopf, an attorney for Clinton County. The county recouped most of that by withholding payments to Pyramids.

The biggest creditor is Champlain National Bank, which is reportedly owed about $800,000.

The bank will try to get what it is owed.

"We will exercise our rights provided to us by the courts to protect our assets," Champlain National Bank President Jon Cooper said Wednesday.

"We will secure our assets and bring the liquidation process for what we have liens on."

Cooper said the bank did agree to pay wages to Pyramids employees up to the latest pay period.

"We don't have to do that, but it is the right thing to do," he said.

The bank is expected to assume the Route 22B facility with all the contents, Dorsett-Felicelli said.

"We therefore have no choice but to close," she said in her e-mail.

OFFERED PAYMENTS
In defense of her center, Dorsett-Felicelli said Pyramids offered to make payments for the missed payroll tax and that she tried to get an independent commercial appraisal of the Pyramids building because she felt it was worth more than the $500,000 at which the bank had it appraised.

With a higher assessment, they might have been able to re-finance and possibly roll over remaining debt, but without an independent appraisal that was not an option, Dorsett-Felicelli explained.

She also said Clinton County told the courts that it refused to increase referrals for home-based programs, which meant Pyramids could not count on more revenue to help offset debt.

Dorsett-Felicelli said the staff and state officials were told Wednesday that the center would be closing; families of children are being notified today.

The closure will immediately impact about 100 kids for the summer program, and the 85 employees will be without work.

Officials from the New York State Labor Department are scheduled to visit the school Monday to assist employees.

PROVIDER NEEDED
Clinton County Legislature Chairman Jimmy Langley (R-Area 7, Peru) said the county has been looking for other care providers, in anticipation of Pyramids closing.

"We needed to have a plan B in place, and that's what we've been working on," Langley said.

Finding out-of-classroom providers should not be a problem, Langley said.

"We can handle every child, but finding classroom settings will be the toughest challenge."

SCHOOL CONCERNED
The Plattsburgh City School District relied on Pyramids to provide services.

"I don't know what the impact will be," Superintendent James "Jake" Short said of the closing. "It will force us to survey those families and find another avenue."

The county provides services for children with special needs until the age of 3. Once a child is preschool age, the school district takes over responsibility for serving the student.

"We were definitely OK with Pyramids staying open, because they certainly have been filling a need within the community," Short said.

"If they are unable to continue, we will have to look to see if any other entity is going to pick up the pieces."

Plattsburgh City School doesn't have the capacity or space to take on those responsibilities within its buildings.

"They (Pyramids) fill a very special niche within this area," Short said.

"Children with disabilities and their families need services, and that will not go away."

— Staff Writer Stephen Bartlett contributed to this report.