By Stephen Smoot
The closure of Allegheny Wood Products triggered two initial lawsuits last week, the first elements of the ripple effect of the company’s February collapse.
On March 1, former employees filed a class action lawsuit against Allegheny Wood Products. In the case filed in the United States District Court of Southern West Virginia, the plaintiff is named as “James Beane, on behalf of himself and all others similarly situated.”
The crux of the suit centers on AWP’s failure to provide a notice as required by the federal Worker Adjustment and Retraining Notification Act, or WARN Act. According to a United States Department of Labor publication on the subject, “you must receive a written notice 60 days before the date of a mass layoff or plant closing if you meet the conditions discussed in this brochure. If your employer does not give you the required notice, you may be able to seek damages for back pay and benefits for up to 60 days, depending on how many days’ notice you actually received.”
Additionally, AWP did not pay wages on or before the next scheduled payday when they ceased operations.
AWP was under obligation to provide the notices, and state media outlets confirmed with officials that this, in fact, had not taken place.
The suit alleges violations of both the WARN Act and state laws government worker pay.
In the United States District Court for the Northern District of West Virginia, United Bank filed a suit to recover $40,475,000 under a deed of trust agreement, dated Sept. 27, 2023. This agreement stemmed back to a loan agreement made in September 2005. The deed of trust was issued with the aim of giving AWP an opportunity to repay its secured debt. It extended the maturity date on the loans to Jan. 31, 2024.
Three weeks later, “the parties entered into a Forbearance Agreement effective February 23, 2024 (the “Forbearance Agreement”), wherein Defendants acknowledge that the Loans are in default and consent to the appointment of a receiver, and United agreed to forbear from exercising its remedies other than the appointment of a receiver. A true and exact copy of the Forbearance Agreement is set forth in Exhibit H to the Appendix filed contemporaneously with the Verified Complaint.”
United Bank requested from the court “the immediate appointment of a receiver with the appropriate authority is necessary to (1) take control of the properties, assets, and operations of Defendants; (2) operate, manage, and protect the properties, assets, and operations of Defendants; and (3) oversee, manage, and direct the acts, conduct, operations, assets, liabilities, and financial condition of Defendants. “
