Court sides with workers in New Jersey bankruptcy case

A bankruptcy plan that failed to include compensation for hundreds of workers was in the hands of the Supreme Court, who last week sided with the employees.

According to various media reports, a claim by hundreds of workers at a New Jersey trucking company, JEVIC Transportation, Inc., says the workers were treated unfairly when they were denied a claim for lost wages after JEVIC filed for bankruptcy protection.

“The justices ruled 6-2 that a bankruptcy court should not have approved a plan allowing JEVIC Transportation Inc. to settle other legal claims first, leaving nothing for the workers,” an article published by the New Jersey Herald reads.

Japan Export Vehicle Inspection Center Co Ltd (JEVIC) is a Japanese-registered company that works in pre-shipment inspection and certification of cargo. The company’s services are primarily for used-vehicle inspection and extend to vessels, containers, and new vehicles.

JEVIC provides independent pre-shipment inspections, surveys, verifications and certifications.

The company has facilities located at major Japanese ports – in Yokohama, Kawasaki, Nagoya, Osaka and Kobe – and its head office is in Yokohama City.

With more than 30 facilities for inspection purposes JEVIC carries out inspections in countries such as Dubai and South Africa, where vehicles are shipped from Japan and subsequently exported from there, to other destinations within Africa.

JEVIC clients range from shipping agents, freight forwarders and vehicle importers / exporters to individuals and countries that require mandatory inspection and certification.

“The workers said the bankruptcy plan did not follow traditional rules requiring unpaid wages to be paid ahead of other debts,” the article reads. “The company said settlements with lower-ranking creditors are sometimes essential to resolving the bankruptcy process.”

In 2008 JEVIC filed for bankruptcy protection, two years after it was acquired by a private equity firm in a leveraged buyout.

About 1,800 ex-workers are seeking lost wages.

“Writing for the court, Justice Stephen Breyer said a bankruptcy court does not have the power to deviate from the basic priority under which creditors are paid in bankruptcy cases without seeking consent from the affected parties,” the article reads.

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Pennsylvania battery company owes state money following bankruptcy

Aquion Energy Inc., a Pittsburgh battery company that has a manufacturing facility in Westmoreland County, filed for bankruptcy last week and the Pennsylvania Department of Community and Economic Development released a statement that it intends to try and recover funds the company owes it.

The state was reportedly the company’s top creditor. The loans were secured by collateral, but what that collateral was has not been publicly released.

Read more: Bankruptcy Lawyer, PA

“Aquion was current on all of its loan payments and made payments as recently as last week,” an article on the Trib Live website reads.

How much the company still owes is unknown.

About 80 percent of Aquion employees were let go after the company filed for Chapter 11 on March 8 because the company failed to raise enough money to keep running. The factory has closed its doors.

Aquion representatives have said the company hopes to find a buyer for its assets.

“State incentives helped keep Aquion in Western Pennsylvania in 2012 when the company was looking for a place to expand and build a factory,” the article reads. “The company received $8.6 million in grants and another $8 million in loans from the state, according to DCED’s investment tracker tool. Aquion’s bankruptcy filing listed the $8.6 million in grants.”

Aquion had reportedly failed to live up to a promise it made the state that it would create 341 jobs on top of the 70 employees it already had. The company also promised to invest at least $64.4 million in private money into the factory.

According to Trib Live, as of February 2016 Aquion had created 50 more jobs and secured $108.4 million in private investment. The company asked for a two-year extension to fulfill its promise and was granted a one-year extension instead. The company’s extension expires at the end of March and the state will then reassess its progress.

Governor Tom Wolf, who was not in office when Aquion received state funding, is calling for tighter accountability from businesses that receive state funding.

“In his 2017-18 budget proposal, Wolf … recommended tighter controls on state funding for economic development projects,” the article reads. “Wolf proposed forcing companies that receive state grants to maintain newly created jobs for five years and stay in the state for at least eight years. If a company fails to create the jobs it promised, it will have to repay the grant. If the company moves out of state, it must repay the grant plus a 10 percent penalty.”

 

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Creditors object to more debt for NPHS amid Chapter 11 filing

Following the recent Chapter 11 filing for North Philadelphia Health System, some creditors are voicing their concerns and objecting to the tax-exempt organization’s plan to go into more debt to get through bankruptcy.

Unsecured creditors filed objections to the plan on Tuesday, according to an article on philly.com, saying they feel the organization must prove its viability before borrowing more money.

NPHS provides healthcare through prevention, education, and treatment in their hospital and community, including services and special programs for persons with behavioral medical disorders and/or extended acute medical conditions. They offer services in a manner that is spiritually and culturally sensitive and responsive to community needs, according to their website.

North Philadelphia Health System states its vision is to be the region’s premier provider of behavioral and extended acute medical services. Through the provision of high quality, innovative, culturally sensitive services, North Philadelphia Health System will meet the needs of the community it serves.

North Philadelphia Health System will continue its commitment to the under-served patient population in all its plans for services expansion.

The banckruptcy filed by NPHS last year was due to the fact it couldn’t pay its $400,000 mortgage that was due Jan. 1. The organization sought to protect millions of dollars held by the mortgage trustee, so filed for bankruptcy.

“The bankruptcy was portrayed as a maneuver to eliminate leftover liabilities from St. Joseph’s Hospital, which NPHS closed last March, after the Pennsylvania Department of Human Services pulled a long-running subsidy. St. Joseph’s is under an agreement of sale for $8.1 million,” the article reads.

People on the creditors committee are questioning whether there is a reorganizational plan available for the debtor – or whether they plan to focus on liquidation. North Philadelphia Health System’s bankruptcy attorney released a statement saying the system would provide information to allay the creditors’ concerns.

Talks of selling, refinancing and mergers were also brought up.

“NPHS’s plan is to continue providing drug and alcohol services and psychiatric care at Girard Medical Center, at Eighth Street and Girard Avenue, but the committee of unsecured creditors said it is not clear that Girard can be operated profitably,” the article reads.

The committee has said their plan to borrow $3 million dollars and use $1 million of that to repay pre-bankruptcy debt, should be halted until NPHS reduces expenses, including executive compensation. One example was the cost of a vehicle the debtor was paying more than $1,000 for each month – the other is the debtor’s annual pay, which a Feb. 17 filing claims is the highest paid rate of a health care executive in the region compared to the size of the organization.

NPHS assured the committee that the vehicle has been given up and that the debtor – along with other executives – took a 10 percent pay cut.

 

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Popular electronics and home appliance retailer files for Chapter 11

A well-known electronics and home appliance retailer in the U.S. recently announced that the business filed for Chapter 11 bankruptcy.

HHGregg, which has multiple consumer stores and a distribution center in New Jersey and more than a dozen stores in Pennsylvania, made the announcement on Tuesday.

The filing comes just days after the company announced it was shutting down 88 stores in 15 states, a move made to give the Indianapolis-based company a better chance at survival, according to an article published by the Indy Star.

USA Today reports that HHGregg will close the following local stores:

In New Jersey:

• Deptford, Woodbury
• Mays Landing
• Moorestown

In Pennsylvania:

• Dickson City
• Downingtown
• Erie
• King of Prussia/ Berwyn
• Lancaster
• Langhorne
• Lower Paxon/ Harrisburg
• Mechanicsburg
• Montgomeryville/ North Wales
• North Hills/ Pittsburgh
• Whitehall
• Whitman Square/ Philadelphia
• Wilkes-Barre
• Wyomissing
• York

A news release by HHGregg explains that the business has signed a term sheet with an anonymous party to buy the retailer’s assets. The selling of assets will allow the company to exit Chapter 11 “debt free with significant improvement in liquidity for the future stability of the business.”

Robert J. Riesbeck, president and CEO of HHGregg said in the release that the company has given a valiant effort, which included a review of alternative routes, but they believe restructuring through Chapter 11 is the best option to ensure the company long-term success.

“Riesbeck said he expects the Chapter 11 process to be smooth and quick,” the article reads. “The company expects to emerge from the restructuring in about 60 days.”

The store closures, which were announced last Friday, should be complete sometime in April. About 1,500 people are expected to be laid off. This is the company’s second round of layoffs. Last month, HHGregg announced it was laying off about 100 people.

About 132 U.S. stores will continue with their usual day-to-day business.

“Over the years, the retailer has struggled for market share against online retailers and traditional big-box stores such as Best Buy,” the article reads. “To stand out, the company has tried to reinvent itself as a high-end appliance store through its Fine Lines division.

HHGregg is the seventh-largest appliance retailer in the U.S.

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