UPDATE – OCTOBER 9, 2012
Here is an update about what has been happening, and what has not been happening, in the bankruptcy proceedings of Hull House:
On July 10, the Union filed one large multiple claim for all the union members, seeking to obtain the unpaid vacation, 401k payments, severance pay, unpaid employee expenses, wages in lieu of termination notice, and WARN Act notices penalties. The total of the claim is $ 2,275,766.92 including WARN Act penalties, and $1,741,444.25 in the event that WARN Act penalties are not awarded.
The personnel records of Hull House have been shredded, in order to protect the personal information of the employees.
On October 4, the bankruptcy judge appointed a Trustee, Mr. Larry Lefoldt, with the authority to terminate the 401(k) plan and pay out the funds to the employees. I have spoken with Mr. Lefoldt, and he needs some time, perhaps 15-30 days, to pull together all the information on the plan and make sure that certain statutory requirements have been met. But he indicated to me that he hopes to move quite quickly to terminate the plan, and to work with Mutual of America to send all the employees their distribution notices. Those notices will advise you of your various options to roll over the funds into a new retirement plan somewhere else, to cash it out, etc. I told him that I would check with him in 30 days to see what the status of the terminations was, and he responded that he would probably have something to report before then, and that he wanted to move quickly to get people their money.
I have heard from some members that Mutual of America distributed their funds to them back in July, which was unexpected, but a welcome development for the members involved. However, in view of the appointment of a Trustee to terminate the plan, any further distributions from the plan will take place when the plan is finally terminated. I will stay in touch with the Trustee and post an update when I have learned to the date on which the plan is going to be terminated, and the funds made available for distribution.
Cautionary note: As I have reported before, the chances are slim that any of the Hull House employees will be able to obtain the amounts we are seeking. Virtually all of the assets of Hull House were pledged as security for loans which kept the organization afloat for the last few years, and those secured creditors will be paid before any of the unsecured creditors (including employees) can get anything.
The one chance that there may be some money for paying the employees’ claims is if the Trustee in bankruptcy files suit against the Jane Addams Hull House Association Board of Directors for breach of their fiduciary responsibility. IF that suit were filed, and IF the Trustee would win the suit, we are informed that the Board had an insurance policy with a maximum benefit of $10 million which would be available to satisfy the judgment, at least to that level. But at this point, no such lawsuit has yet been filed, and in the event that one is filed, it could take a year or longer before we would know anything.
What happens next: For the next period, there will be little activity in the bankruptcy court which has any impact upon our members’ claims. In the event a lawsuit is filed against the Hull House Board of Directors, I will notify you of that. But again, it will take a long time before anything results from it. I will notify you of the 401(k) plan termination as soon as I have heard about it, and you will receive distribution notices from either Mutual of America or the Trustee concerning your options.
Robert T. (Tim) Yeager, Financial Secretary/Treasurer