NAC seeking Chapter 7 protection
Company’s filing for bankruptcy forces employees’ lawsuit to transfer courts
A lawsuit brought by former employees of North American Communications Inc. has been transferred to the United States Bankruptcy Court for Western Pennsylvania where NAC filed a petition last week to liquidate its assets.
The Duncansville-based direct mailing firm, represented by Johnstown attorney Kevin J. Petak, filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code, and in the process notified 457 possible creditors of the action.
The notice of the Chapter 7 filing indicated that the number of potential creditors is between 200 and 999.
It claimed its assets are between $10 million and $50 million, and its estimated liabilities are also between those limits.
Its notice states that funds will be available for distribution to unsecured creditors.
The petition was filed by the company’s CEO, Nicholas Robinson.
The case has been assigned to the Chief Judge of the U.S. Bankruptcy Court for Western Pennsylvania, Jeffery A. Deller, who has served on the court for 14 years.
North American Communications was founded 40 years ago by Michael Herman, and over the years, it became a major employer in the Altoona area.
However, on May 20, the company suddenly closed its doors.
Company President Rob Herman, son of the founder, issued a statement saying, “This was an agonizing yet unavoidable choice and one we hoped never to make.”
The company also recently closed its plant in Mexico.
The employees reacted immediately, filing a possible class action petition with the U.S. District Court in Johnstown, charging the company with violating the federal Worker Adjustment and Notification Retraining Act, contending the company did not provide 60 days’ notice, in writing, of the plant closing as required under the WARN Act.
The employee lawsuit was working its way through District Court, having been referred to the Alternative Dispute Resolution Program.
That all changed with the filing of the notice of bankruptcy.
The employees’ legal action was transferred Friday to the Bankruptcy Court where it will become part of the ongoing proceedings.
The attorney for the employees, Charles Saul of the Pittsburgh law firm of Margolis Edelstein, said Tuesday that a question to be decided is whether the employees’ claims against the company will take precedence over other claims filed by alleged debtors.
The employees are asking the court to award them 60 days’ lost wages and benefits, including retirement and vacation pay, as well as health insurance.
In a 2017 federal lawsuit, founder Michael Herman claimed the company stopped paying his retirement.
That lawsuit, filed in Johnstown, has not been transferred to the bankruptcy court.
According to the bankruptcy petition filed by NAC, the deadline for filing claims against the company is Aug. 22. Government claims must be filed by Dec. 9.
The bankruptcy trustee, attorney James Walsh of Johnstown, and NAC attorney Petak, could not be reached for comment Tuesday.