Some 250 laid-off workers of Koffee Kup Bakery and subsidiary Vermont Bread Company will have to wait longer for resolution of their months-old back-pay claims after a growing group of other creditors successfully lobbied Tuesday to delay a court decision until they could be heard.
About 150 employees in Burlington and 100 colleagues in Brattleboro were surprised April 26 to find their manufacturing and distribution plants abruptly closed without explanation, leading the judge to appoint a receiver to sell the assets.
Chittenden Superior Court Judge Samuel Hoar Jr. recently ruled that undisclosed proceeds from the surprise last-minute purchase of the properties by Flowers Foods — the $4 billion maker of such national brands as Wonder Bread — could reimburse three large lenders for some $8 million in loans.
The judge had hoped to resolve workers’ separate claims for nearly $800,000 in accrued vacation and sick time at a hearing Tuesday. Instead, he faced lawyers for eight other creditors who convinced him to wait at least a week until they could argue their own cases.
“The court was hopeful that today there would have been an agreement as to how to proceed,” Hoar said from the bench. “It’s clear to the court that there is not. The list of people seeking to participate in some way or another in the feast is growing.”
Koffee Kup lawyer Alexandra Edelman had asked the judge to pay employees as soon as possible so interest doesn’t accrue on what’s owed.
“Those amounts will increase the longer we delay this,” she said.
But attorneys for several other creditors expressed more worry about their own bills.
Said KeyBank representative John Kennelly: “The bank’s only concern is that it gets paid its legal fees.”
And Robert DiPalma, counsel for several other clients: “Our interest here is if there’s a fund of monies, we want to be at the table and ensure that there’s a fair process for distributing those.”
After an hour, the judge delayed any ruling until another hearing on July 14.
Customers with hopes that Koffee Kup and Vermont Bread would rehire workers and return local baked goods to store shelves were shocked June 7 when the bakeries were sold to the Georgia-based Flowers Foods, which quickly issued a press release saying it has “no immediate plans to reopen” either the Burlington or Brattleboro plants.
Although the sale price hasn’t been publicized, lawyers involved say they can pay secured creditors KeyBank $7.6 million, the Vermont Economic Development Authority $213,000 and the Continental Indemnity Co. $84,000 and still have money left over.
Just how much is what others want to know.
“It’s the lack of that information that is standing in the way of resolving the issues,” said Andre Bouffard, an attorney representing several interests.
Flowers Foods purchased the business under a confidentiality agreement, although Koffee Kup’s lawyer offered Tuesday to share financial information with select peers.
“This all may be a moot point,” Edelman said, “because my hope is once they understand how much is available, we can move on.”
Workers, for their part, have complained the company paid out accrued vacation and sick time into their accounts after closing, only to have it electronically retracted from their accounts because of a disagreement about who’s responsible for covering such obligations.
Attorney General TJ Donovan filed court papers May 19 supporting an emergency call for employees to be reimbursed nearly $800,000.
The judge expressed eagerness Tuesday to resolve all the issues sooner rather than later.
“The tension between and among potential claimants is only going to get greater the longer we wait,” he said.
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