Fountain Hills will be watching closely as Rural/Metro Corp. works its way through a Chapter 11 bankruptcy process, according to Town Manager Ken Buchanan.

“At this point it is a wait and see scenario,” Buchanan said in a statement after Rural/Metro announced its bankruptcy filing.

“It is too early for the town to make any determinations about the contract other than to ensure that services continue uninterrupted while the bankruptcy process runs its course.”

The town is currently in the final year of a five-year contract with Rural/Metro.

This fiscal year it will cost the town about $3.5 million for fire protection and emergency services.

The Town Council Thursday evening will conduct a closed executive session to discuss the contract.

Mayor Linda Kavanagh said she has been watching closely as Rural/Metro has worked to stabilize its financial situation.

“I am pleased that they avoided bankruptcy disillusion and instead were able to renegotiate their debts with their creditors,” Kavanagh said.

“With their new agreement locked in, Rural Metro has secured financial stability and will continue to serve and protect the residents of Fountain Hills.

“There will be no reduction in staffing or service, so it will be ‘business as usual’ which has always been good for Fountain Hills.

“Consequently, contract negotiations will proceed as they always have and should end with a mutually beneficial and satisfactory agreement.”

Other council members chose to reserve comment on the situation.

“I believe it is too early to tell,” Councilman Henry Leger said. “Before forming my opinion, there is much more to learn about their specific situation and how this could affect their future performance.

“Heretofore, they have provided exemplary service to our community.”

Rural/Metro has been the emergency services provider for Fountain Hills dating back to development days prior to incorporation.

The company was earlier under contract with the now-defunct Fountain Hills Fire District.

Rural/Metro announced Aug. 4 that it had reached an agreement in principle with lenders and bondholders in an effort to reduce the company debt going forward.

That agreement calls for the Chapter 11 bankruptcy filing.

A statement on the Rural/Metro website says, “The company intends to use the process to significantly reduce its debt, renegotiate unprofitable contracts and free up capital for investments to strengthen its business and further improve patient care.”

Scott A. Bartos, president and chief executive officer for Rural/Metro, called the restructuring plan good news for the communities served by the company.

“We have a solution that keeps our operations moving forward while cutting our debt in half,” Bartos said.

“The significant infusion of new capital by our lenders underscores their confidence in the value of our business, and will help ensure that we have a strong financial footing to resume growth and investment while honoring our agreements and continuing to provide outstanding service and patient care.”

In conjunction with the filing, Rural/Metro is receiving a commitment for $75 million in debtor-in-possession financing from some of the company’s secured lenders.

Following court approval, this financing, combined with cash generated by ongoing operations, will provide Rural/Metro with sufficient liquidity to meet operational and restructuring needs.

Company bondholders are committing an additional $135 million in new equity in the fourth quarter this year to complete the financial restructuring and position the company for new growth, according to Bartos.

The Chapter 11 restructuring is expected to be completed in the fourth quarter of 2013.

For Fountain Hills, Rural/Metro provides personnel and administrative services for fire suppression and emergency medical response, as well as ambulance personnel and equipment.

Fire station facilities, trucks and other equipment are all owned by the Town of Fountain Hills.