I apologize for not getting this post together sooner – with all my genealogy endeavors and trying to make a living that way, I’ve been backlogged as of late.
First, readers should know that the thoughts in this post are my own and that I don’t speak for any group – the Class Action group, Blum Collins, the Named Plaintiffs, etc. – just me.
Second, I am willing to share what the settlement would mean for me (if approved) with my own financial figures – this is based on my best estimate in terms of vacation accrued, hourly wage and my interpretation of the settlement terms.
Third, I understand that many have not signed on with Blum Collins or the Class Action and I express no opinion on that – it’s a free country and ex-Heller employees have every right to pursue whatever legal means necessary to recover money owed to them by Heller Ehrman LLP.
What I do want to convey is that this group, especially the Named Plaintiffs worked very hard in pursuing claims with Heller Ehrman LLP and last week came to an agreement that a settlement was in their best interests.
For matters of transparency, I have participated in conference calls with the Class Action group and have been aware of issues – many confidential at the time – and have tried to use Heller Highwater in the best way possible to further the interests of the ex-employees as a whole – not just the Class Action group.
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Given the above statements, while the settlement terms could be better, I think they could be much worse if the bankruptcy were to work its course or worse yet fall into Chapter 7 the way it has for the Thelen Reid ex-employees. Ideally the shareholders would do the right thing, as they should have all along, and make certain that their ex-employees were paid the wages to which they are entitled.
But with the bankruptcy filing on December 29, 2008, certain provisions kicked in such as limitations on payment for vacation accrual etc. that not even a settlement agreement (as I understand it) could circumvent.
Vacation – Priority
I had maxed out on vacation accrual at 236.5 hours. Under bankruptcy provisions only the vacation earned during the 180 days prior to either the bankruptcy declaration date or the cessation of business is entitled to priority status.
In the settlement terms, from what I understand, the date of October 31, 2008 is being used which must mean the cessation of business rather than the December 29, 2008 date. This is a good thing since it buys me about two months more accrual as priority. The priority claim is $3,352.00 of which 100% will be paid as part of the settlement.
Vacation – Non-Priority
The balance of vacation earned before the 180 day period is given Non-priority status. Unfortunately for me that is about $8,017.00. It does not matter that there is a $10,950 limit on priority claims, it is the 180 day limit that prevails.
In addition there is approximately $1,020.34 in vacation that would have accrued during the WARN Act period when I should have been paid (see below). This is not included in the priority calculation and this is non-priority.
While Heller Ehrman LLP may agree that I am entitled to that amount, it cannot be made a priority claim. So it becomes a non-priority claim and (as discussed later) is one of the last claims to be paid based on collections and how other creditors are paid.
WARN Act – Priority
The same 180 days provision is used for the WARN Act payments. Since my priority vacation payment (above) does not exceed the $10,950 cap, it appears I will get 100% of the WARN Act payment to which I am entitled – $3,798.00.
What is unclear to me is how this amount is calculated – is it only October 10, 2008 until the cessation of business date, October 31, 2008? Or is it through November 26, 2008, the date used in the e-mail communication of September 26, 2008 announcing the dissolution of Heller Ehrman?
WARN Act – Non-Priority
In the Page 13 of Plan Exhibit C, there is $1.5 M allocated for priority WARN Act claims and $2.35 M listed as non-priority. I am assuming this amount is tagged as non-priority because certain employees exceeded the $10,950 priority cap with accrued vacation or accrued vacation and partial WARN Act payments.
Waiting Time Penalties
All waiting time penalties (applies to California employees only) will become subordinated claims under the settlement terms – meaning they will be paid last after all other claims. In reading the documents, Heller Ehrman LLP feels that this (and other points) would be litigated and consume more attorneys fees so it is in the best interests of all to allocate roughly $7 M towards waiting time penalties but the claim become subordinated.
FICA and Other Taxes
As part of the settlement, Heller Ehrman LLP agreed to pay the employer portion of FICA and unemployment taxes. While I am not certain, I believe that in a normal bankruptcy proceeding, the employee would need to take care of this – someone may need to clarify. If so, this is a plus.
While there is more to discuss such as the fees paid by the estate to Blum Collins, I need to save that for another post. Overall, if I accept the settlement and the Plan of Liquidation is approved, I could see 39% of my original claim paid – perhaps as soon as January 2010.
The remaining 61% would be paid depending upon the claim and where it stands in the pecking order of other claims but it could be anywhere from 20 -80% of that amount. And I would only receive payment as major blocks of money come into the estate, as I understand it.
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Is this the best resolution? No. Am I happy? Not really. But having been involved in previous lawsuit settlement negotiations (one in which I was able to secure a five figure settlement for years of harassment from a neighbor), I had to give up something to get something.
I’d like to think that we would all get the money to which we are entitled as former employees. I truly believe that in a universe which bends towards justice that is how it would be. Actually, I feel that truly responsible people would make a gesture for restitution on their own and not hide behind the bankruptcy provisions. It’s called doing the right thing.
But there is a time to move on. For some of us who have still not secured employment, this settlement could mean the difference when it comes to staving off foreclosure or personal bankruptcy. For others, we just want to put this whole thing behind us and keep the faith that karma will take care of those who took care of themselves.
Over and out.
© 2009, copyright Thomas MacEntee