Some 100 workers who were fired when American LaFrance closed its doors early in 2014 have reached a settlement that will give them the equivalent of six weeks of severance pay. The money will go to employees in the Moncks Corner plant outside of Charleston, S.C.
According to an article in the Post and Courier, the six-figure settlement was part of a class action suit filed by two former employees, Olivia Schreiner and James Schreiner. The total package was $671,000 of which the employees will receive a share of $385,000. The remaining funds will go toward legal fees and expenses, the newspaper reported.
The settlement, which still needs court approval, will be paid by American LaFrance and Patriarch Partners LLC, a New York investment company that controlled the company that manufactured fire trucks before closing.
At the time of the closing in January 2014, the company employed more than 500 workers, but only those in the Moncks Corner plant are eligible for the payment. That’s because the lawsuit cited the federal Worker Adjustment and Retraining Notification Act requiring companies with 100 or more employees to provide written notice of a shutdown or mass layoff at least 60 days before the action. Only the Moncks Corner plant met the minimum employee numbers required by the federal law.
According to the newspaper, the Schreiners filed the suit last year in Charleston alleging the company violated the federal law when it closed the doors in South Carolina and two other states because of financial difficulties. The Schreiners had worked for the company for about 10 years before it closed.
Patriarch Partners, the parent company of American LaFrance, tried to be dismissed from the lawsuit saying it was just a financial adviser, but a U.S. District Judge denied the request.
Earlier this year, the federal Securities and Exchange Commission charged Patriarch Partners and its head, Lynn Tilton, with fraud after American LaFrance was drove into bankruptcy and closure.
The SEC’s enforcement division alleges that Tilton, Patriarch Partners and its branches breached fiduciary duties and defrauded clients by misleading investors about the value of assets in financial statements and failing to value assets using the methods described to the clients.
Further, the SEC accuses the flamboyant investment advisor and entrepreneur, known as “The Diva of Distressed,” of hiding the poor performance of loan assets in three collateralized loan obligation (CLO) funds she and her company manage.
Tilton, 55, known for purchasing distressed companies and turning them around, bought the financially troubled American LaFrance in 2005, taking it over from Freightliner. The company opened lavish facilities in Summerville, S.C. in 2007. A year later, ALF filed for bankruptcy in 2008 citing $100 million in debt, and in January 2014, it closed the doors at its facilities in Moncks Corner.
Last August, ALF’s assets were auctioned off to pay creditors.
