Berkline Furniture of Morristown, TN, traces its roots back to 1928 to Springfield, MA, and though the company managed to survive the Great Depression it could not endure the pressures wrought by the Great Recession more than eight decades later.
The wheels came off on March 30, when the manufacturer of upholstered furniture announced it would immediately cease operations. In a statement, the company, mostly owned by Sun Capital since 2007, said it had unsuccessfully sought a buyer and that its weak financial position left it with no recourse other than to shut down.
Berkline's sudden derailment, just two days before the opening of the Spring High Point Market, put some 600 people out of work and without severance. The workers didn't take matters lying down. Within two weeks of the plant's abrupt closing, workers filed three separate class action lawsuits against Berkline and Sun Capital.
Each of the lawsuits alleges that Berkline failed to observe the Worker Adjustment and Retraining Act (WARN Act), a 1988 law which requires companies to provide 60 days notice before a mass layoff or plant closing. In addition to requesting 60 days of wages and benefits, one of the suits seeks $3.6 million in damages.
Things went from bad to worse last week when a U.S. District Court in South Carolina took the extreme measure in ordering the seizure of 16 containers loaded with the company's furniture in response to the shipper's complaint that it is owed $193,000. While the court determines the legitimacy of the complaint, the furniture, shipped from Shanghai, China, to the Port of Charleston, SC, is being held hostage from retailers and consumers who ordered it.
While ex-Berkline workers try to piece their lives together, more fall-out is likely to come as furniture retailers scramble to find a new source of supply and industry suppliers assess how much they are owed in outstanding invoices. There's also the impact on the tax streams of local governments and school districts.
Meanwhile, Mill's Pride, which Masco Corp. announced more than a year in advance that it would close, continues to ramp down. As painful as that slow, deliberate action may seem, at least workers at the ready-to-assemble cabinet plants in Ohio were given plenty of notice to contemplate their futures.
Berkline and Sun Capital representatives have been mum since the Morristown plant closed. Maybe they ultimately will one day offer a good reason for waiting until the last possible moment to take such a desperate action.
In the meantime, employees of Sun Capital's dozens of other diversified holdings, including Lexington Home Furnishings, Rowe Furniture, American Standard, Boston Market Corp. and Hickory Farms, can wonder whether no news really is good news.
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