Former Pemco cuts deal with WARN Act claimants, seeks court approval

By Jim Witters

Wilmington, Del., April 10 - WAS Services, Inc., formerly Pemco World Air Services, Inc., is seeking approval for a $275,000 settlement with former employees who filed $5 million of claims under the federal Worker Adjustment and Retraining Notification Act, according to documents filed April 9 with the U.S. Bankruptcy Court for the District of Delaware.

"The WARN Act litigation claim and the WARN Act proof of claim currently represent a major hurdle to confirmation of the debtors' plan. In light of the current state of the Chapter 11 cases, it is extremely important that the debtors conserve these resources as much as possible and confirm the plan quickly to maximize recovery available to the debtors' creditors," the company stated in its motion to the court.

The official committee of unsecured creditors concurs with the company's position and supports the settlement, court documents state.

The proposed settlement is between the debtors and Ethan Willock, on behalf of himself and those others similarly situated, including Ashley Brownlie. The group is known collectively as the WARN Act claimants.

The claims stemmed from the July 30 termination of WAS Services employees.

Willock filed a claim on Aug. 3 seeking 60 days of wages and benefits. Brownlie filed a claim on Aug. 30 seeking $2.3 million for the putative class.

Proposed settlement

Under the proposed agreement, Pemco would pay $275,000 to settle the claims and resolve all issues with those who accept the deal.

The settlement also includes provisions allowing individual claimants to opt out.

Of the settlement amount, the claimants attorneys will receive $99,333.

Within 10 days of court approval, Willock will be sent a $5,000 check.

Each of the other WARN claimants will be eligible to receive a share of the remaining proceeds, based on the claimant's rate of pay.

A hearing for approval of the agreement is scheduled for 3 p.m. ET on April 22.

Tampa, Fla.-based Pemco performs large jet maintenance and repair services. It filed for bankruptcy on March 6, 2012 under Chapter 11 case number 12-10799.

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