Originally created 09/08/01

King Mill asset relief delayed

King Mill employees who lost their jobs when the Augusta textile plant closed in May won't get the immediate relief they say they're due.

U.S. Bankruptcy Judge John S. Dalis on Friday allowed the employees' involuntary bankruptcy case to proceed but delayed hearing a motion seeking assets of King Mill's parent company, Spartan International Inc., to pay the employees' medical bills.

First, Judge Dalis will hear arguments from Spartan International on Thursday that Spartanburg is the proper venue for the bankruptcy case to proceed. If he disagrees, the bankruptcy case would proceed in Augusta on Sept. 28.

Augusta attorneys John B. Long, Louis Saul and James Wilson have asked the bankruptcy court to order payment of the employees' medical bills ahead of other Spartan creditors. The lawyers contend the employees will suffer irreparable harm, such as the loss of their homes, if medical bills predating the mill's closing aren't paid.

The employees were not given the required 60-day notice that the plant would close. The abrupt cancellation of their medical coverage kept some employees and dependents with serious medical problems from getting other group insurance coverage, the lawyers said.

Insurance premiums were deducted from the employees' last paychecks, and there should have been money to pay the medical benefits, according to the lawyers.

"At this point in time, no one from Spartan or GE Capital has revealed what happened to the trust funds that should have been made available to pay these medical benefits," the lawyers stated in their Aug. 29 motion.

About 1,200 Spartan employees lost their jobs without notice May 4 when Spartan turned over the keys to five plants in Georgia and South Carolina to its principal creditor, General Electric Capital Corp.

At the request of GE Capital, South Carolina District Judge Margaret B. Seymour of Spartanburg appointed a receiver to sell off Spartan's assets, which would be turned over to GE Capital to help satisfy a $35 million debt.

Fifty-two former King Mill employees then filed an involuntary bankruptcy petition, but Judge Seymour found them in contempt and forced them to seek to withdraw it. Their lawyers appealed the case to the 4th Circuit Court of Appeals, which found in the employee's favor Aug. 16 and put the case back in Judge Dalis' court.

GE Capital then filed a motion asking a U.S. District Court judge for the Southern District of Georgia to remove the case from Judge Dalis' Court. The district judge in Savannah has not ruled on that motion.

In court Friday, Mr. Long accused GE Capital of concocting a "grand scheme to trump the bankruptcy" by purposely creating a "judicial mess" to tie up Spartan assets, a claim GE lawyer Mark Maloney vehemently denied.

Judge Dalis asked Mr. Long what he would want if his motion to proceed with the bankruptcy Friday were granted.

Mr. Long said he wanted the same thing he wanted when he filed the bankruptcy petition May 31 - relief for the employees.

"I want you to order this (interim) trustee (Stephen Wallace) to take these assets and pay these people, not a month from now and not a year from now," Mr. Long said. "These folks need to have relief. ... GE said, 'The devil with these people.' They want to delay them indefinitely."

Mr. Maloney said he took "strong issue" with Mr. Long's comments, that GE's wishes were for the case "to go forward in an orderly, standard fashion."

After the hearing, some King Mill employees voiced frustration with the delay.

"I'm a little confused right now because I thought the judge had already decided on the issue of venue, so I don't know what to think right now," said former employee Martha Griffin. "I think it may be a delaying tactic by Spartan and GE. It looks like they're working together for some reason."

GE lawyers challenged the Augusta venue in June, but Judge Dalis ruled that the case would proceed here. Now he must rule on Spartan's challenge to the Augusta venue.

Reach Sylvia Cooper at (706) 823-3228 or sylviaco@augustachronicle.com.


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