Former Erickson workers to get some of what they're owed

Retirement firm's bankruptcy interrupted payments

March 05, 2010|By Jay Hancock Jay.Hancock @baltsun.com

After hanging in limbo for four months, former employees of Erickson Retirement Communities heard Wednesday that the company will move to pay $750,000 of the $1.8 million in severance they're owed.

Ex-employees owed less than $10,950 in severance would get everything previously pledged by the company, which has been in Chapter 11 bankruptcy proceedings since October. Those owed more would get only $10,950, several dozen of the former workers were told in a conference call Wednesday afternoon.

"Great news for me," said Stacey O'Neale, a former auditor who's owed $6,927, according to court records. "But I feel sorry for all those people who are owed big money."

Some former senior managers are owed $50,000 or more in severance. But at least the company shows signs of paying some of the money and communicating with its former associates, many of whom could really use it.

The matter is scheduled to come up in U.S. Bankruptcy Court in Dallas today. Checks could be sent at soon as late April, employees were told.

I wrote about these folks a month ago. Erickson pledged severance money when it laid off dozens amid last year's terrible economy. Some were promised extra compensation in exchange for agreeing to work extra weeks to close their departments.

But the company's bankruptcy filing put everything on hold. Erickson quickly filed a request to pay the severance, but the motion languished in court. Ex-employees couldn't afford a lawyer and resorted to sending letters to the judge and telling their stories to a snoopy newspaper columnist.

Sharon Kirkley, an Erickson interior-design manager laid off last year, seems philosophical about not getting the full $28,423 that she's owed.

"From the beginning I said to myself, 'I may not get anything,' " she said. "We tried and did the best we could without legal counsel."

Limiting severance payments to $10,950 for employees laid off before a bankruptcy filing is typical in Chapter 11 bankruptcy cases, said Peter Chapman, publisher of Erickson Retirement Bankruptcy News, a newsletter for creditors, lawyers and others interested in the case. That amount is provided for in bankruptcy law.

More than half of the 90 former workers owed severance are owed more than $10,950. Many also have claims in Erickson's profit-sharing plan that are unlikely to be paid out anywhere near full value.

"We hope to resolve this matter as promptly as the court process allows," Erickson spokesman Mel Tansill said of the severance.

The ex-employees hope so, too.

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