 |
 |
October 23, 2004 On October 20, 2004, the court confirmed the plan of liquidation in this matter. The plan will probably become effective sometime in the month of November 2004. The effective date of the plan will trigger several important events: 1. Warn Act Payments. The payments to union employees will probably be made in December 2004. The basic payment is approximately $2,100 per worker in wages. Remember that part-time employees or casuals will receive only one-third a full share, or about $700. The benefits portion of the payment, approximately $900 for full time and $300 for part time or casual employees, will be made directly to the health, welfare and pension funds involved. This sum is not a deduction from the worker’s portion of wages. It is in addition to the sums given above for wages. Wages are subject to taxation; benefits are not. The $2,100 and $700 payments are subject to withholding for federal, state and local tax, FICA, etc. Remember that these amounts are subject to the priority maximum of $4,650 per employee, so an employee who has already received more than $2,550 in priority wages will NOT get the full WARN Act amount (because he or she will already hit the priority ceiling). For example, if a worker in September 2002 received $3,000 in priority wages on account of bounced or missing wage checks for work performed in August, then he or she has only $1,650 left in unused priority. His or her WARN Act payment cannot be the full $2,100, because he or she will hit the ceiling after only $1,650. Any worker whose gross amount on their pre-bankruptcy wages paid post-bankruptcy in September 2002 was $2,550 or less should receive the full $2,100 (or $700 for part-time or casual workers). Please remember that the priority amounts are set by the Bankruptcy Code and cannot be changed through negotiation. 2. What to do about deceased or lost workers. To ensure that the greatest number of employees receive their checks in December, changes of address should be sent to our offices now. Returned checks that are not deliverable will come to our offices. We will attempt to find these employees. If there are not found within 180 days, they will lose their amounts, permanently. If an employee otherwise entitled to a distribution is deceased, you should (1) locate the survivor, usually a widow; (2) produce a copy of the death certificate; (3) produce a copy of the letter in probate appointing the survivor as the administrator or executor/executrix. Send these items to our office, and we will forward them to the correct person at CF. 3. The remaining distribution. The bankruptcy estate will remain open for several more years. There are still approximately 10 terminal properties worth $33 Million to be sold, and at least some of these will remain outstanding until 2008. In addition, the debtor still has about 20,000 claims to review before it can determine the precise dividend. We still expect the dividend to be between 12¢ and 20¢ per dollar. Of course, the exact amount of property sales and the exact amount of claims will determine whether the distribution is closer to the top or bottom of this range. For this reason, we do not expect a distribution on remaining unsecured claims until 2005 at the earliest. When it occurs, the remaining distribution will include (1) any leftover unpaid amount of WARN money; and (2) all other contractual items such as vacation pay, sick leave pay, etc. 4. What will happen next. In about a week, your members will receive letters jointly from CF and our office asking for an explanation of their wage and vacation claims. The reason for the letters is that many employees filed claims for delinquent wages that were later paid in full (and counted against their priority amounts). CF now questions whether these claims are duplicates or whether the employees really mean that they are owed additional wages. For vacation pay, even though CF agrees with the total amount of vacation (or very close to it), CF disagrees with nearly all specific vacation pay amounts claimed by employees. Nearly every employee has either greatly over-counted or under-counted his or her vacation pay, so that while the total calculated by the union and the company is about the same, the amount for any given individual could be off by thousands of dollars. We are trying to determine why there is such a wide discrepancy. It is important that employees respond to these letters. If they ignore the letters, then we will assume that CF’s record is correct. Sick leave, grievances, and other items are under discussion with CF. We expect to reach a settlement of these amounts in early 2005. When settlement of these amounts is achieved, the process of payment can begin next year. Any employee who still has priority left over can use that priority to get a full distribution for part of his vacation pay, sick leave, etc. For example, an employee who had $2,000 of his August wages paid in September 2002, and $2,100 in WARN money, will have $550 of priority left ($2,000 + $2,100 + $550 = $4,650). He can use the $550 to receive that much of his vacation pay in full. Any amounts over the $4,650 will be paid at the general distribution rate, which as previously noted is 12¢ to 20¢ on the dollar. If the employee in this example has $2,550 in vacation pay, only $550 of it will be paid in full; the remaining $2,000 will be worth about $240 to $400 only. Remember that those payments will be stretched out over several years, with the final payment not being made until approximately 2008.
|
 |
|
 |
