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The efforts by former employees of now-closed New Brighton, Minn.-based trucking company LME to secure their owed back wages and expenses may have gotten a bit clearer. Transport Topics has obtained a letter from the Minnesota Department of Labor and Industry sent to Scott Barts, a former company driver, that spells out the legal process going forward. Barts says he is owed $5,000.
In July, LME owners Roger and Shari Wilsey filed what is called an Assignment for the Benefit of Creditors request that puts the assets of the company under the control of a receivership, which has the authority to liquidate those items and use whatever cash is available after the sale to settle outstanding bills.
Chris Knapp is a Minneapolis bankruptcy lawyer with Barnes & Thornburg who is not associated with the case. He said the Assignment for the Benefit of Creditors is similar to the federal bankruptcy law, but usually it is used when the company is being liquidated.
“It is a mechanism where the distressed company can liquidate their assets. It’s akin to a bankruptcy, but it’s conducted through a state court and not a federal bankruptcy court,” Knapp said. “The goal isn’t to restructure or sell the company, it’s to liquidate the assets to pay creditors as much as possible.”
Knapp says the entire process may take more than a year.
It’s not clear how much money LME and the Wilseys owe their former drivers and other employee. However, DLI spokesman James Honerman told Transport Topics “it is an exorbitant amount of money.”
On July 11-12, LME abruptly shut down its 30 terminals in several Midwest states. Workers were promised they would receive more information about when they would be paid.
Several drivers who spoke to TT said they were owed thousands of dollars in pay, bonus money and expenses.
The company isn’t saying anything. The Wilseys have not returned repeated calls from TT for comment or from numerous drivers inquiring about the money. In an undated post from July, the company’s website does not address that issue:
“We deeply regret the situation and the turmoil that the closure has caused to us and all of our constituents, including our employees, owners, senior secured creditors and trade creditors. Given the shutdown, you may have a claim against the company. At this time, no claims adjudication or payment process has been determined. We will advise as further developments warrant.”
LME has lost its attorney as it tries to defend itself during the process.
“We no longer represent LME; they are no longer associated with our firm,” said Jason Asmus, a lawyer with Minneapolis-based Briggs and Morgan. Asmus did not explain why his firm dropped LME, adding that it only represented the carrier during the early stages of the court process. The case is being heard in Ramsey County, which includes St. Paul.
Transport Topics has obtained a 15-page court document from Ramsey County called a Register of Actions, which contains a list of financial institutions, pension funds and other companies that are creditors.
The next court hearing is scheduled for Oct. 17.
Alliance Management, a Bloomington, Minn.-based company that specializes in bankruptcy and restructuring issues, has been appointed the assignee for the process. On July 29, it sent a letter to creditors but did not clarify if the creditors would be paid. Calls to Alliance Management have not been returned.
“We do not yet know what arrangements, if any, can be made on the balance due to you, but we are working to see if a positive outcome can be achieved for all shareholders,” Alliance Management’s letter reads in part. “At this time, no claims adjudication process has been approved by the court. You will receive a further notice once such procedures have been implemented by the court.”
Former LME drivers also told TT that they couldn’t obtain accurate records about what they are owed because the company’s human resources and payroll sites were shut down when the company padlocked its doors.
In November 2016, another company owned by the Wilseys, Roseville, Minn.-based Lakeville Motor Express, closed suddenly and laid off 95 union drivers and dockworkers without pay. A few months later, Lakeville filed for Chapter 7 bankruptcy, which does not require a repayment schedule. However, union workers filed legal complaints that Lakeville Motor Express was continuing to operate, only with a new name — LME — and cheaper, nonunion labor. That case resulted in a $1 million settlement for the workers, payments on which began this spring. However, less than a month after that first payment was made, LME shut down.
The National Labor Relations Board has said the $1 million would more than double if the Wilseys miss a payment. Also, several lawsuits demanding as much as $90 million from Lakeville, LME and the Wilseys for alleged violations of pension obligations continue to also make their way through the court system.
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