Appvion employees might have opportunity for reimbursement
APPLETON, Wis. — Appvion employees who lost millions of dollars in retirement savings when the company went bankrupt last year and was sold may have an opportunity at getting their money back.
Appvion has a mill in Roaring Spring.
A lawsuit filed late Monday by Employee Stock Ownership Plan committee administrator Grant Lyon claims “fraud and concealment” in the handling of the ESOP from the time it was formed in 2001. It demands a jury trial, according to the Appleton Post-Crescent newspaper.
The complaint charges the company’s past senior management, directors, ESOP committee, ESOP trustees and advisory firms with negligent misrepresentation of the true value of the stock and breach of fiduciary duty.
As a result of their actions over 18 years, employees suffered “hundreds of millions in damages, including what they had invested in the ESOP Plan,” according to the Post-Crescent.
Lyon is an independent financial adviser who was appointed by Appvion’s board as sole member of the ESOP committee in August 2017, just prior to the company’s bankruptcy filing.
The complaint was filed in the U.St. District Court’s Eastern District of Wisconsin, Green Bay Division.
Defendants named in the lawsuit include former Appvion CEOs Doug Buth, Mark Richards and Kevin Gilligan; former general counsel Paul Karch; and others in financial and operations positions in the company over time. Valuation firms and professional advisers listed as defendants include Houlihan Lokey Capital, Stout Risius Ross and Argent Trust Co., the Post-Crescent reported.
“The defendants participated in ‘fraud or concealment’ regarding the true value of the PDC stock,” the complaint reads. “Appvion management and professional advisors fraudulently persuaded Appvion’s employees to buy PDC stock.”
PDC was the corporate name of Appvion’s parent company, Paperweight Development Corp., which was 100 percent employee-owned. It became worthless when Appvion filed for bankruptcy in October 2017.
The Appvion company isn’t involved in the lawsuit as a defendant or as a beneficiary.
Mitchell Becker, president of United Steelworkers Local 10-0422, which represents the majority of the workers at the Roaring Spring mill, was pleased to learn of the filing.
“I hope that today’s court filing will demonstrate former Appvion executives’ breach of fiduciary responsibilities toward the ESOP plan and hold them accountable. Hopefully this court action will recoup some of the financial and emotional losses suffered by Appvion ESOP participant members. As an ESOP participant, I’m glad someone will look into the details of it,” Becker said in an email.
The timeframe of the lawsuit is contingent on attorneys filing motions and paperwork. A judge then determines the course of action.
Employees could eventually see money from a $35 million insurance policy and potentially from two other $10 million insurance policies, the Post-Crescent reports.
At the time of bankruptcy, the ESOP’s value was said to be about $40 million.