Berkline employees sue company over abrupt shutdown
Claim federal law required 60 days notice
Larry Thomas -- Furniture Today, May 9, 2011
WILMINGTON, Del. — Two former employees of upholstery producer Berkline have filed a lawsuit in conjunction with the company's bankruptcy case that accuses Berkline of violating federal law by failing to give 60 days notice prior to closing its factory.
The suit, known in bankruptcy court jargon as an adversary proceeding, says the company violated the Worker Adjustment and Retraining Notification (WARN) Act when it suddenly closed its Morristown, Tenn., factory in late March.
The employees, Robert Rose and Ronald Seme, are seeking class action status for their suit.
The complaint says the affected employees are entitled to 60 days wages and benefits, and asks the court to designate the payment as a wage priority claim in Berkline's Chapter 11 bankruptcy case. That would allow the former employees to be paid before unsecured creditors.
Sun Capital Partners, Berkline's majority owner, also was named as a defendant. The suit claims Sun Capital "blocked outside financing for Berkline" and prevented the company from being sold as a going concern.
Berkline filed for Chapter 11 bankruptcy protection on May 2, more than a month after it ceased operations. When the shutdown occurred, Berkline said several attempts to sell the company had failed.
Rose was one of several employees who filed suits in U.S. District Court in April that also accused Berkline of violating the WARN Act. Those cases have been put on hold until the bankruptcy case has been resolved.
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