FAQs for Employees
What is the timeline for the Bankruptcy Section 363 sale process?
The key dates for the sale process are as follows:
- June 26 – All parties interested in participating in the auction must declare their intentions
- July 1 – The auction itself is conducted
- July 2 – Court hearing to approve the new owner. This date assumes that the auction is completed in one day.
- July 17 – Again, this date is somewhat tentative. Closing will occur 10-15 days after the Court approves the new owner.
When will the next employee meetings be held?
We are tentatively targeting the week of July 6 as the next series of employee Q&A meetings. By that time, we will know who participated in the 363 sale auction, scheduled for July 1.
Following that, we anticipate being able to have another series of meetings in mid July, by which time we should know the identity of the new owner. Finally, in late July, hopefully after the sale closes, we are targeting for another series of meetings. However, as and if the schedule changes, we will keep you posted.
Why am I receiving all these different legal notices and letters?
The “rules” of the bankruptcy process dictate that these notices be distributed to various constituencies – employees, customers, vendors – who may have had previous interactions with the company. Occasionally, multiple copies of particular notices may be received due to the fact that the individual appears on multiple databases within the organization.
When will I know if I have a job with the new owner?
We do not know the exact timing – or the process itself – for employee notification. However, due to the many employee and benefit details that must be accomplished when ownership changes, one would logically assume that notification would occur between July 2 (court declared and approved buyer) and July 17 (court stated sale closing date). We will communicate these details as soon as they are known.
If the owner does not offer me a job, am I eligible to receive unemployment?
Yes.
If the new owner offers me a job and I decline, am I eligible to receive unemployment?
This would be a discussion between you and your employment office and would be based on the facts and circumstances of the job offered to you by the new owner. Most likely, however, you would not be eligible to receive unemployment.
What about the 401k plan (and monies)?
As of the sale closing date, the SENCORP 401k plan will no longer accept employee contributions. Investments in the plan will still react to daily market activities depending on how your individual plan/investments are structured. Eventually, you will receive notification that all investments in the SENCORP 401k plan will need to be re-distributed from the plan and, accordingly, you will be provided with a defined time period in which to do this. Employees will most probably be presented with three options:
- Roll their monies into an individual IRA (note: Vanguard offers such and you could stay invested in your current plan);
- As any new owner will most likely offer a 401k, employees may be able to roll their SENCORP monies into the new company’s 401k plan;
- Have the SENCORP monies distributed to themselves, however this will most likely cause you to incur significant personal income tax consequences.
What will happen to loans from the SENCORP 401k plan?
We believe the new owner will most likely offer a 401(k) plan, and if you are employed by the new owner, your outstanding loans from the SENCORP 401k plan will likely continue as loans under the new owner’s 401(k). Additionally, the terms of those loans under the new owner’s plan will likely be substantially similar.
Will there be any interruptions in my medical coverage?
No, there will be no interruption of medical coverage if you are employed by the new owner. If you are not employed by the new owner, there will be no interruption unless you decline COBRA coverage and do not have coverage other than COBRA.
Will my earned vacation carry over to the new owner?
At the present time, all issues surrounding vacation time are unknown. As soon as we have more information, we will communicate the details to you.
Is the Company staying in business?
Yes. We have a commitment from an investor group led by Wynnchurch Capital, Ltd. and including Great Lakes Equity Partners to purchase the Company’s assets as a going-concern. The Company has financing from its existing lender group, led by Bank of America, that will enable us to continue to conduct normal business operations.
Will the Company be sold?
Yes, the company has received a financial commitment from an investor group, led by Wynnchurch Capital, Ltd. and Great Lakes Equity Partners, two leading middle market private equity investment firms, to buy all of the company’s assets as a going-concern. Chicago-based Wynnchurch has extensive experience in manufacturing, logistics and value-added distribution. Great Lakes has in-depth knowledge of the building material and power tool segments of the construction industry. The sale, which should be final within approximately 60 days, will be subject to overbid by other interested purchasers, and the ultimate winning bid is subject to bankruptcy court approval.
Did the company file for bankruptcy?
Yes, the Company has filed for relief under Chapter 11 of the United States Bankruptcy Code, but as described above, the Company’s operations will continue in Chapter 11. Many of you are aware of other well-known companies that have made similar filings and continued to conduct business. Fleetwood Enterprises and Orco Construction Supply are two long-time SENCO customers. Additionally, a couple of local examples are Delta Airlines and Milacron.
Why did this happen?
Current economic conditions and those of the last 18 months, particularly within the construction industry, have been extremely challenging. After extensive discussions with our lenders and exhaustive consideration of all available options, we determined that, in order to maintain business operations and customer service without interruption while we address our liabilities, a court-supervised restructuring is appropriate.
What is going to happen to the employees?
During the restructuring, your current wages and salaries will not be impacted. In the asset purchase agreement, Wynnchurch has committed to offer employment to substantially all of our employees upon substantially similar terms.
Will the Company have money to pay its suppliers?
A Chapter 11 filing generally prohibits the Company from paying liabilities that arose prior to the filing, and the manner in which claims for resolving those liabilities will be addressed throughout the course of the Chapter 11 proceedings. However, the Company is allowed to pay new post-filing liabilities in the ordinary course of business, and the company believes that, with the financing provided by the Company’s existing lender group, led by Bank of America, it will have sufficient funds to pay such liabilities as they arise. As the Company will continue to depend on many of our past suppliers for future goods and services, we are hopeful that they will be willing to work with us, from this point forward, to create a working relationship that is mutually beneficial.
What about my pension and retirement plans?
May 8 - If you are eligible to receive a Company-paid pension, the terms and amount of that pension may be affected as a result of the restructuring. In the future we will be communicating directly with pension plan participants regarding the impact of the restructuring on their pensions. The restructuring has no impact on the 401(k) plan. All of the assets of the 401(k) plan are held in trust and are not subject to the claims of the Company’s creditors.
June 15 – SENCORP notified all pension plan participants that it did not make its required $404,380 April 15, 2009 contribution to the SENCORP Retirement plan. The notification also indicated that for the duration of the Chapter 11 bankruptcy proceedings, SENCORP does not intend to make the required quarterly contributions to the plan (due July 15, October 15, January 15 and April 15). Accordingly, SENCORP will file a notice of such with the Pension Benefit Guaranty Corporation (PBGC) each time it fails to submit such contributions to the plan. For more information regarding the roles and responsibilities of the PBGC and its mission, please visit www.pbgc.gov.
Will the current management team remain in place?
The current management team will remain in place.