Former Colortree Group Employees Could See Some Lost Wages Before End of Year
It seems the former employees of the Colortree Group, a direct mail printer based in Henrico, Va., which abruptly shut its doors in June, might be receiving some lost wages before the end of the year.
According to Richmond BizSense, the company's court-appointed trustee Kutak Rock attorney Peter Barrett is trying to work out an arrangement in the bankruptcy proceedings that would result in $500,000 in available cash collateral that could be used to pay the company's former employees.
In September, a former employee of the Colortree Group brought about a class action lawsuit alleging that the company did not give the required notice of closure in accordance with the WARN Act.
According to Richmond Times-Dispatch, Barrett came up with a deal in which employees could be paid before the case is finalized.
The news site reported:
The settlement agreement, [Barrett] said, is a reasonable deal that is in the best interest of the company, its creditors, and former employees. Doing a deal so quickly and early in a liquidation case should provide a greater return to the creditors, he said.
Besides, possibly getting former employees their money by the end of the year — maybe before Christmas — influenced the outcome, Barrett said.
“Certainly that played a factor in the decision,” he said about employees getting their money before the holiday.
Although the amount each employee will get has not been revealed — and some of it will reportedly be used to pay lawyer and administrative fees — it will be divided between the Colortree Group's 240 former employees.
The deal would settle the class-action lawsuit brought on by former employees, the Richmond Times-Dispatch reports.
The settlement deal calls for Sterling National Bank — one of the Colortree Group's creditors allegedly owed more than $6.8 million, according to the news report — to advance the $500,000 that will be used to pay the former employees. Further, it reports, "In return, the bank and Barrett agreed to equally split all accounts receivable proceeds, which could amount to collecting up to about $1 million. The trustee currently has on hand about $404,000 from accounts receivable proceeds."
Barrett told the news outlet:
“We were able to discover a potential claim against Sterling and we utilized that leverage to get Sterling to put up some money in the case to avoid litigation,” Barrett said.
Additionally, Richmond Times-Dispatch reports that James "Pat" Patterson, the Colortree Group's president and CEO who led the company from 2011 until its bankruptcy, has agreed to "pay $165,000 to settle potential claims that Barrett believes he could have against him."