Kingsbury workers get no treat for Halloween



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The bankrupt Kingsbury Corp. told its workers Monday they might have to wait until the company is sold before they can get paid three weeks' back wages from July.The company was in Bankruptcy Court in Manchester to get approval from the court to pay its utility company, an investment banker, a financial adviser, as well as to carve out fees for the company's attorneys.Kingsbury, which has been manufacturing in Keene for 135 years, filed for bankruptcy Sept. 30 to ward off an Oct. 11 auction by Utica Leaseco LLC, a Florida firm that is owed $1.25 million on a 1998 loan.According to the most recent filings, Kingsbury owes more than $4.5 million and has less than $1 million in assets -- and almost all of those assets are in accounts receivable.Aside from Utica, the company owes $1 million to Diamond Business Credit, $1.3 million to the U.S. Small Business Administration and $925,000 to TD Bank.The bankruptcy filing doesn't give the company's entire financial picture, because there are related entities that are also involved."In all candor, there is not enough money to pay the workers right now," Kingsbury attorney Robert Keach told the court on Monday.The company will continue to look for money, but if it can't come up with it, the workers will have to be paid out of the proceeds of the sale, he said.However, there was no mention at the hearing of a particular buyer, just the tentative approval of the hiring of Donnelly Penman & Partners, a Michigan investment banking firm to find a buyer. The firm will be paid $17,500 a month plus $250,000 of the proceeds of any deal, as well as 5 percent of any sales price in excess of $6 million.Keach assured all parties that it would be a quick sale, and Donnelly would only collect three monthly payments.The court also heard motions to let the company's unsecured creditors hire TrueNorth Capital Partners LLC on an hourly basis, capped at $7,500 a month, plus a $50,000 success fee, if TrueNorth brings a buyer to the table.The court also approved a motion for a $12,500 up-front fee for Public Service of New Hampshire, as long as the utility doesn't cut off services, And there were payments of attorneys for both the debtor and creditors.But attorneys representing the United Auto Workers and the Attorney General's Office were not happy.They said they had expected that the 60 workers, owed about $240,000 in back wages, would be paid at Monday's hearing.Instead, the issue of back pay was -- as Judge J. Michael Deasy put it - "kicked down the road.""Bait and switch" is what Peter Roth, an assistant attorney general representing the state Department of Labor, labeled the decision. The workers, it seems, have a lower priority than "investment bankers and other professionals who are sopping up the cash," he said. "That scares me.""If push comes to shove, everyone in this room will get paid except the workers," said Mary T. Sullivan, an attorney for the UAW. Sullivan said that she might challenge the sale on the grounds that the company was selling "hot goods" -- goods obtain by illegally paying workers less than the minimum wage.Keach denied that there was any bait and switch. The company never promised to pay the workers at Halloween. It just said that it was unlikely that they would be paid before then, he said.The assets had already been pledged to secured creditors, he said. Indeed, Utica Leaseco literally was occupying the plant at the time of the bankruptcy filing to auction off that equipment.What little money that remained after the filing, he argued, had to go toward keeping the lights on and selling the company as a going concern."Frankly, if the professionals don't do their job, there won't be any money or jobs for these employees," Keach said. "The money to pay them doesn't exist, unless the UAW wants to loan the company money.""The workers have already lent the company a lot of money," muttered Roth.While the workers will have top priority among most of the unsecured creditors, the questions remains: Will a sale of Kingsbury actually go through, and if so, will the sale price be enough to pay its debts, including that owed to the workers? -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW Edit ModuleShow Tags