Circuit City's objection to unused paid time off claims overruled

By Caroline Salls

Pittsburgh, Oct. 6 - A bankruptcy judge has overruled Circuit City Stores, Inc.'s objection to $9.5 million in unused paid time off claims filed by former employees, according to a Tuesday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

Judge Kevin R. Huennekens said Circuit City's communication of a change in its paid time off policy "was confusing and perhaps misleading."

According to the ruling, the company stopped paying for unused paid time off at termination immediately before it filed for bankruptcy.

However, 27 former employees told the court that they were unaware of the new policy or that the policy was misleading.

As a result, the judge said the claimants who filed a response to Circuit City's claims objection are entitled to priority claims.

The claims of former employees who did not respond to the objection will be dismissed.

The Richmond, Va., electronics retailer filed for bankruptcy on Nov. 10, 2008 in the U.S. Bankruptcy Court for the Eastern District of Virginia. Its Chapter 11 case number is 08-35653.

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