Reorganization plan approved

Package does not include severance pay for 250 Patriot National laid-off workers

A Chapter 11 reorganization plan has been approved for Fort Lauderdale-based Patriot National, but it doesn’t include severance pay for 250 employees of the insurance services firm who found themselves terminated on the day before last Thanksgiving.

“We haven’t seen a nickel from Patriot,” said Judy Pidgeon, one of the 250 laid-off workers. The layoffs affected workers at the company’s Fort Lauderdale headquarters and in at least six other divisions across the United States.

Although approval of the reorganization plan clears the way for the claim to move forward, it could be months before any of the former employees receive the severance and benefits they contend are owed, according to the attorney representing former employees in the claim.

“Our claims have not yet been litigated, and they don’t have priority status yet,” said Charles Ercole, of the Philadelphia-based law firm Klehr Harrison Harvey Branzburg LLP, which is representing plaintiffs Michelle L. Cole and Andrea Scarlett and potentially all 250.

The company filed for bankruptcy protection on Jan. 30, about two months after laying off the employees and announcing plans to reorganize under the supervision of its major creditors.

Last week, the company announced that the United States Bankruptcy Court, District of Delaware, on May 4 approved a reorganization plan calling for the transition of ownership from public shareholders to funds and accounts managed by Cerberus Business Finance LLC and its affiliates, and TCW Asset Management Co. LLC.

Patriot National CEO John Rearer was quoted in a May 8 news release as saying that the plan “provides our Company with a significantly healthier capital structure that will enable us to be agile and competitive in the current market.”

A Patriot National attorney did not immediately respond to a request for comment about the plan on Tuesday.

The layoffs were triggered by the collapse of an affiliated worker’s compensation insurance provider, Guarantee Insurance, which went into state receivership in November