Berkline says it did not violate WARN act in plant closing
Two former employees have filed suit saying the producer did not give advanced notice
Furniture Today Staff -- Furniture Today, June 29, 2011
WILMINGTON, Del. — Motion upholstery producer Berkline said it did not violate the federal WARN act when it closed its factory in April because the struggling company was actively seeking new capital until the day the shutdown occurred.
In a filing in U.S. Bankruptcy Court here, Berkline said it was a "faltering company" as defined in the act, and could not have given the 60-day advance notice of the plant closing the law required.
"(T)he employment terminations were caused by business circumstances that were not reasonably foreseeable as of the time that the notice would have been required," Berkline said.
Additionally, Berkline said it was actively seeking new capital in the weeks prior to the shutdown, and said a plant closing notice "would have precluded Berkline from obtaining the needed capital for business."
The shutdown resulted in the loss of 650 jobs, and Berkline filed for Chapter 11 bankruptcy protection the following month.
Berkline's filing came in response to a lawsuit filed by two former employees who said the company didn't give the advance notification required by WARN, the Worker Adjustment and Retraining Notification Act. They are seeking 60 days wages and benefits for themselves and all other ex-Berkline workers.
The lawsuit is known as an adversary proceeding because it is being heard as part of the bankruptcy case.
Sun Capital Partners, the investment firm whose affiliated funds have controlling interest in Berkline, also was named as a defendant in the proceeding.
The firm said in a court filing that it was not the employer of the two who filed the suit and is not responsible for paying the wages and benefits.
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Berkline Says It Did Not Violate WARN Act
Jul 13, 2011
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