Dear all,
Last week, the Trustee’s Counsel and the Union stipulated to a court order setting the amount of the Union’s priority and general claims, and on Friday, May 9, the judge signed the order. We were successful in getting most of what we asked for. We were not successful in getting the unpaid 401(k) amounts treated as priority claims. They were given general unsecured status by the judge. However, we are very happy that we were able to get the unpaid vacation, severance and WARN Act payments treated as priority. We are also happy that the Trustee accepted our calculation of these amounts. They recognized that the Union’s figures were probably the most reliable accounting available. The whole process was hampered by the fact that nobody was able to obtain the actual personnel and payroll records from Hull House itself.
The final amounts which the Court is allowing for the claims we filed on behalf of our former members are as follows:
Total Priority Claims: $1,512,064.15
General Unsecured Claims: $ 607,032.65
Total Combined Claims: $2,119,096.80
As I cautioned you before, however, there isn’t enough money in the bankrupt estate to pay all the claims. The Trustee’s Counsel has informed me that there is enough to pay approximately one-third of the Priority Claims (a total of approximately $500,000). The General Unsecured Claims will not be paid. Based upon the figures I have compiled, and upon the Trustee’s Counsel’s estimate, I would expect that the amounts being paid to our former members will be between $1,000 and $3,800, depending upon the length of service and the amount of the unpaid vacation for each member.
We are getting closer to the final distribution. However, there will be a number of procedural steps and filings which will be required before final checks can be issued. So, a date certain for distribution of the payments cannot be given. The Trustee’s Counsel said it might possibly be sometime in July, but at this point it is too early to say.
When they are ready, the checks should be mailed directly to each former employee at his/her postal address by the Bankruptcy Court. I have been in touch with the Trustee’s office about how you should send in your current addresses, and am waiting for their reply.
The light at the end of the tunnel is in sight…
In solidarity,
Robert T. (Tim) Yeager
This is an update on the Hull House bankruptcy case. There is still nothing final to report just yet. But here is an update on where we are…
The most recent hearing on the case was on April 10. We had hoped that the Bankruptcy Judge would have ruled that day on our Motion to include the unpaid 401(k) contributions as a priority claim. However, at that hearing, the Judge requested further information and argument in support of the Union’s Motion before ruling on the Motion. The Trustee’s counsel was also given the opportunity to file information and argument in opposition to our Motion. Both our Motion and the Trustee’s Response are scheduled to be heard at the next regular Motion date, on May 8 at 10:30. The Union’s Reply In Support of Motion, giving additional legal authority and argument, was filed on April 17, so the Judge will have it in advance of the hearing. We hope that this will be the last hearing dealing with the Union’s claims, and that we will know on that day whether the unpaid 401(k) contributions will be treated as priority or general claims.
As I have reported before, there isn’t enough money available in the bankrupt estate to pay all the claims. What we have been fighting for is to get the maximum amount possible for the members, and that means arguing that our members’ claims are entitled to priority status. I am very happy to report that we have had some success in doing that. We successfully argued for inclusion of the WARN Act damages and severance pay as priority claims, along with the accrued but unpaid vacation. It was not a sure-fire thing that we could have won the WARN Act and severance pay issues, but we did prevail, and those amounts will be treated as priority. Winning the WARN Act and severance issue puts the biggest amount of money into our members’ pockets (57 days’ pay for the WARN Act, and between 2 and 6 weeks of pay for severance, depending on the number of years you worked). What is less clear is whether the unpaid 401(k) amounts will be included as priority. That involves a smaller amount of money, but we will should know the outcome of that shortly.
For many of our members, the outcome of the 401(k) issue will not affect the amount of money they will get. For others, however, if we can prevail on the issue, it could mean another $100 or $200 for them. We are fighting to get every dollar we can for you.
I have confirmed again with the Trustee’s counsel that our members will be likely to get about 1/3 of the amounts we have filed priority claims for. Our priority claims, with or without the 401(k) amounts, total approximately $1,500,000. Therefore the total dollar amount for paying our members’ claims is approximately $500,000. Each member will get approximately 1/3 of the amount we have claimed for you. At this point, I would estimate that largest payouts will be somewhere between $3,000 and $4,000. That would be for the employees who had the greatest amount of accrued vacation and severance. Others who had used some of their vacation, and who worked at Hull House for a shorter period of time, will get less than that.
When can you expect your payments? I don’t know yet. It is likely that we are still months away from a final settlement of the case. Our issue will probably be resolved on May 8, but there will likely be hearings after that dealing with other administrative aspects of the case. I will send out another email, and post it on the website, as soon as I know anything definite about that.
Regional Organizer
NOLSW/UAW Local 2320
542 S. Dearborn Street, Suite 490
Chicago, IL 60605-3503
312-461-0543
The attorneys for the Trustee in the Bankruptcy have agreed to give priority status to our claims for unpaid vacation and severance, and general status to our unreimbursed expenses and payment in lieu of notice. But they objected to our claims under the WARN Act, and also for the unpaid 401(k) contributions. As I indicated before, this is basically good news. It is likely that the amount of money available to pay any claims will be in the neighborhood of $500-600,000. Our total claims for vacation and severance add up to about $570,000. So, if the Trustee’s position is upheld by the Court, then we are in a good position to expect the payment of at least some of the vacation pay and severance.
But in an effort to ensure that our members get as much as possible, our attorney has filed a Response in which he argues that we are also entitled to the WARN Act penalty amounts as a priority claim, and that the 401(k) amounts should be allowed as a general claim. The “general” claims are unlikely ever to be paid, but we want to be in the best position possible when this case finally comes to a close. And I am pleased that the attorneys for the Trustee have agreed to add the vacation accruals for the people we recently added to the list.
There is a hearing on these objections and responses on Wednesday, February 19, at 10:30 a.m. in Room 742 of the Bankruptcy Court, Dircksen Federal Courthouse, before Judge Carol Doyle. As in the other hearings on these matters, there will be no testimony. It is largely a lawyer-to-lawyer event, and it will be over rather quickly. But if you wish to witness the proceedings, you certainly may attend.
Our attorney will be in touch with me following the hearing, and I will send out another update when there is something further to report.
312-461-0543, ext. 101
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This is an update on the Hull House bankruptcy case.
As I predicted at our December 2nd meeting, on December 4th the Bankruptcy Court approved the Settlement Agreement reached between the Trustee’s counsel, the officers and directors of Hull House, and Quattro FPO Solutions LLC, which was the accounting firm for Hull House. This Settlement Agreement resulted in a payment of $850,000 into the bankrupt estate by the Board and the accounting firm. The Board and the accounting firm also abandoned their respective claims as creditors, totaling approximately $520,000.
Attorney fees for the Trustee’s counsel will first be paid from the settlement amount, before the net amount is made available for the payment of other claims. The attorney’s fee is $170,000 (20% of the total), which leaves $680,000 from the Settlement amount. The Trustee is taking the position that none of the secured creditors have a security interest in this $680,000 amount. If that position is approved by the Court, the $680,000 will be available to pay the claims of priority unsecured creditors.
On December 13, the Trustee filed its “Objections” to the claims filed by most of the creditors, including the Union. These “objections” basically set forth the Trustee’s position as to which claims are entitled to priority, which are non-priority, which are allowed and which are disallowed.
The good news is, as I reported on December 2, the Trustee is proposing to allow the severance pay and unpaid vacation pay claims as priority unsecured claims. These amounts are $368,471.66 for severance, and $163,490.92 in unpaid vacation, for a grand total of $ 531,962.58 in PRIORITY UNSECURED CLAIMS.
The Trustee is allowing as non-priority (general) unsecured claims the one-month payments in lieu of getting proper notice of layoffs, in the amount of $ 412,130.81, and unreimbursed expenses in the amount of
$26,677.92. These are non-priority GENERAL unsecured claims.
The Trustee did not agree that WARN ACT payments would be allowed, nor did they agree to allow the unpaid 401(k) payments. If these had been allowed, they would have been in the nature of non-priority GENERAL unsecured claims.
And there were six union members who field individual claims. The claims filed by the Union on their behalf are being disallowed, and will be dealt with separately. I don’t know what the six members claimed, but if it included severance and unpaid vacation, those amounts will be entitled to priority status, and may also get a piece of the Settlement. The Trustee will not let them be paid twice, however, and so they are being carved out of the Union’s multiple claim and treated individually.
So, the GOOD NEWS is that if the Court ultimately rules in favor of the Trustee on these issues, and after payment of administrative costs and fees, there should be some money available to pay a decent chunk of the SEVERANCE and UNPAID VACATION claims. There are other priority unsecured creditors who could also get something. There won’t be enough money available to be non-priority claims, however.
There is a court hearing on the Trustee’s Objections at 10:00 a.m. on January 15 in Courtroom 742, Dirksen Federal Building, 219 S. Dearborn, Chicago. Our attorney and I will be there. At this point, we don’t know what the Court will do. We will support the Trustee’s position that the settlement amount should not be considered as collateral for the secured creditors. and we don’t know if the hearings will be concluded on that day, or run on into other days. I will report back to you after the 15th.
So, in a nutshell, there is a possibility that you will get some of your unpaid vacation and severance. Stay tuned!
This email is to follow up the email I sent you last week concerning a potential development in the Hull House bankruptcy case. We now know what the proposed settlement is, between the Board of Directors and the Trustee.
Attached you will find a copy of the Motion filed by the Trustee last week which requests that the Court approve a settlement reached between the Trustee, the Hull House Board of Directors, and the accounting firm for Hull House (Quattro).
This Motion has been set for hearing on at 10:00 a.m. in Room 742, on December 4, 2013, at the Dirksen Federal Courthouse, 219 S. Dearborn St. in Chicago.
The Trustee represents the bankrupt estate in the interest of all the Creditors. It is the Trustee’s job to pull together all the available assets of Hull House, include them in the estate, and then to recommend to the Court a distribution of those assets in accordance with the guidelines set forth in the bankruptcy statute. If you recall, the Union (among others) had urged the Trustee to investigate whether the Hull House Board of Directors had any legal liability for the collapse of Hull House, and if so, to bring legal action against them for damages. We were aware that the Board was insured by a $10 million policy which would cover some of the claims, in the event that a court found that they were liable. The Trustee did pursue this course of action, and retained Special Counsel to investigate a possible lawsuit against the Board, and also against Quattro, the accounting firm for Hull House.
The attached Motion reports upon the actions of the Trustee and the Special Counsel, and sets forth the amount of the proposed settlement. I recommend that you read it.
Briefly summarized, this document reports that the Special Counsel served subpoenas upon the Board and Quattro, obtaining nearly 25,000 pages of information pertaining to the potential lawsuit. Counsel assessed the merits of possible legal action against the Board and Quattro, who denied liability. An all-day conference was held on September 9, involving the Board, Quattro and the Special Counsel, and supervised by a federal bankruptcy court judge. The parties reached a proposed settlement which would add $850,000 to the assets of the estate, paid by the Board and Quattro. According to this proposed Settlement, the insurance carrier for the Hull House Board of Trustees will pay $525,000 into the estate. Quattro will pay another $325,000, and will also withdraw its claim against Hull House for nearly $500,000.
If approved by the bankruptcy court, the liability of the Board and Quattro would be fixed at $850,000, and that amount would be added to the estate for distribution to the creditors. The Special Counsel will be compensated $170,000 for its work on the case, which will come out of the settlement amount.
It appears that the Special Counsel has acted with due diligence to pursue possible claims against the Board, and based upon his assessment of the merits of the case and the cost of complex litigation, has concluded that a lawsuit against the Board and the accounting firm would not likely result in a judgment which would provide a substantially greater amount than that reached in the settlement talks. This settlement was reached with the participation and assistance of a federal judge, as well. I am advised by our attorney that, barring any unusual developments, the Court will most likely approve the proposed settlement.
What does this mean for our claims? It means that a net amount of $680,000 will be added to the estate, which will then be among the assets available to pay the claims of the creditors. Based upon the fact that there are several secured creditors which huge claims which are ahead of us in line, however, it is unlikely that much money, if any, will remain to pay the various claims of the employees.
Our attorney will be attending the hearing on December 4, and will be reporting back on any further developments. It is not clear whether the Motion will actually be ruled upon on that day, and if the Court does rule, it will not be with a full-blown hearing, with testimony, cross-examination, etc. There won’t be much to see or hear. But hearings of the bankruptcy court are open to the public, so you may certainly attend if you wish to. In any event, I will report back to you again after December 4th.
Please review the attached document. If you have any questions, please feel free to contact me by email, regular mail, or phone, and I will attempt to answer your questions as best as I can. If a number of our former members wish to have a group meeting, I will schedule one and send you notice.
