April 02, 2010
The review and objection process related to asserted secured and administrative claims has progressed to the point that I am comfortable with the Estates’ ability to adequately reserve the remaining claims in those categories. We are now working at calculating and determining the amounts owed to claimants asserting Class 1 (Priority Wages) and Class 2 (WARN Act Claims).
The Debtors have filed their “Seventeenth Omnibus Objection To Claims – Fix and Allow” (the “Objection”) with the Bankruptcy Court to “fix and allow” the Class 1, Class 2 and Class 7 (General Unsecured) Claims. These various claim amounts were previously provided with the Disclosure Statement and ballot to each WARN Act claimant per the Disclosure Statement Order. [See Section XII.A.4 of the Disclosure Statement in the “Documents” section of this website] No challenges to the listed amounts were received by the Official Committee of Unsecured Creditors from any WARN Act claimant.
Each employee with a Class 1 or Class 2 claim will receive a special notice titled “Notice of Seventeenth Omnibus Objection To Claims – Fix and Allow” (the “Notice”). The Notice includes: (1) a list of your Class 1, Class 2 and/or Class 7 claims we propose to “fix and allow”; (2) a list of your other claims – including those previously scheduled – that are being disallowed; and (3) the detailed procedures for you to file a written response should you disagree with the proposed treatment. The Notices were placed in the mail on April 1, 2010.
IF YOU AGREE WITH THE NOTICE
Do nothing if you agree with the treatment outlined in your Notice. Your silence is deemed consent to the Objection and your claims will be “allowed” in the amounts proposed. You will then be treated consistently with the other Creditors in these Classes as described in Section III of the Plan.
IF YOU DISAGREE WITH THE NOTICE
If you object to the proposed treatment in any way you must file a response by April 22, 2010 as set forth in greater detail in the Notice. If you file a timely response, you will need to appear in Court on May 10, 2010 or some later date set by the Bankruptcy Court to resolve your disagreement with the fix and allow amount.
Priority claims based on wages, salaries, commissions, and certain employee benefits are limited by the Bankruptcy Code to a total of $10,950 per claimant.
When and how will Class 1 claims be paid? I intend to make a single, mass distribution to all the Holders of Allowed Class 1 Claims as soon as possible and in conformance with the Plan. At the earliest, a distribution could occur in June 2010, but the timing ultimately will depend on the responses received and how long it takes to resolve them. I will be utilizing PayChex payroll services to prepare and mail the distribution checks, and they will need about three weeks notice before checks can be cut. Federal, state and local withholdings are required to be deducted, so Class 1 distributions will be net of these reductions. Accordingly, Class 1 claimants will receive an IRS Form W-2 in January 2011 for these distributions.
When and how will Class 2 claims be paid? The process described above, when complete, should fix the amount of the allowed Class 2 Priority WARN Act Claims. After Class 1 distributions are completed, the timing of Class 2 distributions are a function of conformance with the Plan and the availability of funds, which is not assured. If and when funds become available, payment of Class 2 distributions will be prepared in stages through pro rata distributions via PayChex. Counsel for Holders of Allowed WARN Act Claims receive one-third of each distribution made to this Class. However, these distributions will not be subject to wage-type withholdings. Claimants receiving Class 2 distributions will receive an IRS Form 1099-MISC for each year in which distributions are made.
You may monitor this website for additional updates.