LAWFUEL – The Legal Newswire – The next woe to hit bankrupt American Home Mortgage Inc is a multi-million dollar claim from workers for two months’ wages and benefits.
By giving workers one day’s notice before the Aug. 3 shutdown, the Melville company violated the 60-day notice set by the Worker Adjustment and Retraining Notification Act, according to the suit filed last week by Ahmad Rasheed and Michael Surowiec. The filing could turn into a class action claim representing up to 4,000 workers, if bankruptcy court Judge Christopher Sontchi in Delaware agrees.
Stuart Miller, the Manhattan attorney for the plaintiffs, said arguments might have to be put on hold until it’s clear that American Home has enough assets to pay off workers. The company plans to auction off some assets next month. “If it’s a complete washout, then there’s just no point” in going on with the lawsuit, Miller said. “We’re not going to go ahead and create unnecessary work for everybody.”
American Home’s bankruptcy filing listed assets of $20.6 billion and debts of $19.3 billion, but those figures came from the quarter ending March 31. That was before write-downs on the company’s portfolio led lenders to demand repayment, ultimately bankrupting the company.
It let go more than 6,250 of about 7,400 employees in 550-plus offices across the country, including at least 1,300 of its 1,460 Melville employees. Another 250 will leave by week’s end, while the remainder will continue for one to six months to wrap up operations.