Former employees of LandAmerica, the collapsed Richmond financial giant, will finally get a portion of the severance pay that was promised to them before the company crumbled into bankruptcy.
A decision brought down by the U.S. Court of Appeals this month affirmed that the claims of 127 former LandAmerica employees should be given priority status in the bankruptcy process. That means a portion of their severance payments will be put ahead of unsecured creditors.
“It’s a tremendous victory,” said Joshua McKarcher, an attorney with Covington & Burling in Washington, which represented 103 of the 127 claimants for free. “They were all fired roughly three years ago, and they’ve been waiting to get the money.”
Payment of the severance has been held up since the trustee of the LandAmerica Financial Group bankruptcy estate objected to a previous ruling on the priority status.
“The bankruptcy code does not say whether or not an employee gets severance — it simply controls the priority in which it gets paid,” McKarcher said.
The 127 employees will each receive up to $10,950, the highest amount allowed under the bankruptcy code, at a priority status. Any severance beyond that balance will be pooled in with other unsecured creditors and paid on a percentage basis depending on how much money the trustee is able to recover.
Based on the money recovered thus far, those unsecured creditors will receive about 28 percent of what they are owed.
The priority claims that the former employees will receive totals about $650,000, McKarcher said.
“There is enough money to pay those people and these priority claimants,” McKarcher said.
As for when the money will be in the former employees’ hands, McKarcher said all indications are that the trustee will not appeal the decision any further. The next step would be the U.S. Supreme Court.
“The trustee is making good and working with us to get those severance checks out soon,” McKarcher said.
Chris Perkins, an attorney with LeClairRyan representing the trustee of the LandAmerica Financial Group bankruptcy estate, said they have 90 days decide whether to appeal.
“Barring a further appeal, the $10,950 payments will be made shortly,” Perkins said. “The rest will get paid pro-rata with other creditors as they receive payments.”
“We’re going to try to sort through that and see if there’s a way to get them paid as soon as we can,” Perkins said.
The trustee is still working to recover funds for the estate. One such recovery effort came in the form of a lawsuit filed this month seeking $365 million from former LandAmerica executives and directors.
This case is not related to the separate trustee put in place for LandAmerica’s 1031 Exchange business, the collapse of which has left investors still waiting to see how much of their money could be recovered.
McKarcher said he has already heard from laid-off workers who finally claimed a victory.
“Here you have the lower-level, mostly non-executive employees winning,” McKarcher said. “Their emails are overflowing with gratitude.”
Former employees of LandAmerica, the collapsed Richmond financial giant, will finally get a portion of the severance pay that was promised to them before the company crumbled into bankruptcy.
A decision brought down by the U.S. Court of Appeals this month affirmed that the claims of 127 former LandAmerica employees should be given priority status in the bankruptcy process. That means a portion of their severance payments will be put ahead of unsecured creditors.
“It’s a tremendous victory,” said Joshua McKarcher, an attorney with Covington & Burling in Washington, which represented 103 of the 127 claimants for free. “They were all fired roughly three years ago, and they’ve been waiting to get the money.”
Payment of the severance has been held up since the trustee of the LandAmerica Financial Group bankruptcy estate objected to a previous ruling on the priority status.
“The bankruptcy code does not say whether or not an employee gets severance — it simply controls the priority in which it gets paid,” McKarcher said.
The 127 employees will each receive up to $10,950, the highest amount allowed under the bankruptcy code, at a priority status. Any severance beyond that balance will be pooled in with other unsecured creditors and paid on a percentage basis depending on how much money the trustee is able to recover.
Based on the money recovered thus far, those unsecured creditors will receive about 28 percent of what they are owed.
The priority claims that the former employees will receive totals about $650,000, McKarcher said.
“There is enough money to pay those people and these priority claimants,” McKarcher said.
As for when the money will be in the former employees’ hands, McKarcher said all indications are that the trustee will not appeal the decision any further. The next step would be the U.S. Supreme Court.
“The trustee is making good and working with us to get those severance checks out soon,” McKarcher said.
Chris Perkins, an attorney with LeClairRyan representing the trustee of the LandAmerica Financial Group bankruptcy estate, said they have 90 days decide whether to appeal.
“Barring a further appeal, the $10,950 payments will be made shortly,” Perkins said. “The rest will get paid pro-rata with other creditors as they receive payments.”
“We’re going to try to sort through that and see if there’s a way to get them paid as soon as we can,” Perkins said.
The trustee is still working to recover funds for the estate. One such recovery effort came in the form of a lawsuit filed this month seeking $365 million from former LandAmerica executives and directors.
This case is not related to the separate trustee put in place for LandAmerica’s 1031 Exchange business, the collapse of which has left investors still waiting to see how much of their money could be recovered.
McKarcher said he has already heard from laid-off workers who finally claimed a victory.
“Here you have the lower-level, mostly non-executive employees winning,” McKarcher said. “Their emails are overflowing with gratitude.”
The severance pay checks STILL have not been mailed out !!!
Haven’t received mine either