Some 250 laid-off workers of Koffee Kup Bakery and subsidiary Vermont Bread Co. will finally receive more than $800,000 in back pay 12 weeks after their businesses closed without notice last spring.
Chittenden Superior Court Judge Samuel Hoar Jr. granted accrued vacation and sick time on Tuesday to 150 employees in Burlington and 100 colleagues in Brattleboro who found their manufacturing and distribution plants abruptly shuttered, along with a sister Connecticut company, on April 26.
The judge, who appointed a receiver in May to sell the assets, ruled last month that undisclosed proceeds from the surprise last-minute sale of the properties to Flowers Foods — the $4 billion maker of such national brands as Wonder Bread — could reimburse three large lenders for some $8 million in loans.
That didn’t sit well with workers, who have complained the company paid out accrued vacation and sick time into their accounts after closing, only to have it electronically retracted because of a disagreement about who’s responsible for covering those obligations.
The judge had hoped to resolve the estimated $830,000 back-pay and interest claims earlier, but other creditors asked him to wait until they could argue their own cases.
Most of the others owed money, having seen private sale information yet to be made public, and told the judge Tuesday they didn’t oppose the employees being reimbursed before them. But a lawyer for Eastern Packaging Inc., citing a $275,000 outstanding bill, disagreed with covering the paid time off first.
“There is no basis for giving the PTO claimants a priority over other general unsecured creditors,” attorney Andre Bouffard said during a hybrid in-person and online court hearing.
Koffee Kup lawyer Alexandra Edelman, for her part, asked the judge to pay employees as soon as possible so interest didn’t continue to accrue on what’s owed. That call was seconded by the Vermont Attorney General’s Office, which earlier filed court papers supporting the immediate reimbursement.
After an hourlong session, the judge called for paying the PTO claim “as soon as can be done.”
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.
Flowers Foods purchased the businesses under a confidentiality agreement. Although the sale price hasn’t been publicized, lawyers involved say they can pay the employees $830,000 as well as secured creditors KeyBank $7.6 million, the Vermont Economic Development Authority $213,000 and the Continental Indemnity Co. $84,000 and still have an undisclosed sum of money left over.
Under the judge’s ruling Tuesday, the current receiver will reimburse the employees, then transfer the remaining funds to another administrator who’ll address the other creditors.
“The plan here, as far as the court is concerned, is to wrap up this receivership as quickly as can be done,” the judge said.
