Bankruptcy judge approves $3 million for 4,000 former Shopko workers promised severance

Green Bay Press-Gazette

About two-thirds of Shopko's former store workers will be eligible for severance pay under a plan approved by a judge Thursday morning.

U.S. Bankruptcy Judge Thomas Saladino, of Nebraska, approved creation of a $3 million settlement fund that will pay 4,000 Shopko workers two or four weeks of severance pay, based on amounts the former retailer offered them in spring 2019.

At the time, the now-shuttered retail chain sent a memo to workers offering severance pay as an incentive for them to keep working through store liquidation sales and closures. The company ultimately did not make those payments.

A sport utility vehicle is loaded with the last inventory from the Bay Park Square Shopko store in Ashwaubenon in June 2019.

Shopko's parent company filed for bankruptcy protection from creditors on Jan. 16, 2019. The company announced it would close all 360 of its stores by late June 2019 after efforts to find a buyer failed.

In May 2019, five employees objected to the company's proposed liquidation plans on the grounds it failed to pay employees' severance. Each of those five employees will receive a "service award" of $1,000 for leading the claim.

Attorneys for Shopko and the five workers, who represented all employees offered a severance, agreed on terms of the settlement in May of this year. The settlement was submitted to the bankruptcy court for consideration in late August and received no objections from creditors or interested parties before Thursday's hearing.

Jack Raisner, an attorney with WARN Lawyers, who represented the employees in pursuing the class settlement, applauded the work of attorneys involved in resolving the claims and getting money to the former employees.

"A great deal of cooperation and professional conduct and constructive work (was done) by the debtor, I’m pleased to say," Raisner said. "It’s something that deserves some affirmation in terms of being in this position to be able to send checks to retail workers for whom the economy has not been good at all."

The lawyers who represented the employees in the proceedings will receive $753,000 in fees, equal to 25% of the settlement amount. The remainder, almost $2.3 million, will be distributed on a pro-rated basis to eligible employees.

The request to approve the settlement notes it will resolve all workers' claims, avoiding the risk of "costly, time-consuming and uncertain litigation on claims of approximately 4,000 former employees," the motion to approve the settlement states.

One of those employees is Kristi Van Beckum, who is eligible for four weeks' severance after working for almost 14 years at Shopko's Madison area stores. She said she and her coworkers were counting on the severance and many stuck around because of it.

"We risked losing potential job opportunities by sticking around," Van Beckum said. "Then the day we officially found out about not getting the severance was the last day we were open. It felt like a false promise."

Van Beckum credits United For Respect, a group that helped organize the former Shopko workers behind the demand for severance pay, with helping deliver the payments almost 18 months later.

"Working with United for Respect definitely gave me lots of hope. It’s all you can really do is be hopeful," Van Beckum said. "I feel without them it probably wouldn’t have happened."

Here are the key details of the settlement, based on documents submitted to the bankruptcy court.

Who’s eligible?

Any former employees who were provided a “severance memorandum” as part of the store closings, signed and returned the document, and remained with the company until their stores closed.

Also eligible are employees who did not receive the memo but remained employed until their store closed and did not receive a severance payment.

How soon will my check come?

WARN Lawyers indicates eligible employees can expect to receive a check within 100 days after Saladino signs the settlement order approved in Thursday's hearing.

What will I receive?

Eligible employees will receive a pro-rated portion of the settlement based on how much is available and whether they were offered a two- or four-week severance. All applicable taxes will be deducted from the payment.

What happens next?

The claims administrator for Shopko's estate will contact eligible employees with notice of their eligibility and what the next steps will be. It will also publish a notice in USA Today.

After 60 days, the claims administrator will send the employees' lawyers a list of workers who could not be notified of the settlement. The attorneys will have 15 days to provide updated mailing addresses.

Employees who cannot be located within 90 days will not be eligible to participate.

What happens if there's money left?

Any funds remaining after 180 days will be paid to employees who filed their own, individual claims against the company. Anything left after that will be distributed between the Brown County United Way and Feeding America Eastern Wisconsin.

What about the employees who aren't eligible?

About 2,000 employees who helped close the last Shopko stores in late June 2019 or who worked in the corporate office did not receive a severance offer and are not eligible for the severance payments approved Thursday. Some continue to press for their own settlement, buoyed by Thursday's development.

Jacob Soha, who worked for Shopko for three years at locations in the western United States, worked until the very last stores closed on June 23. He said it was frustrating that employees who worked until the end were not offered severance pay.

"It would make sense to pay everyone a severance," Soha said. "For that large group of associates (getting a payment), I feel great for them. It's a huge chunk of the workforce that wasn't going to get anything otherwise. But it's not enough."

Soha said he was one of the first former employees to contact United For Respect to seek their help in organizing a campaign for Shopko workers. He still has hope he and other employees will receive a payment. Even if they don't, Soha said it's important that retail companies and their owners understand they need to take care of their workers in such circumstances.

"I have hope that this is just going to show momentum for workers," Soha said. "This isn't enough, but private equity companies need to understand they have to set up a compensation fund or support fund because workers won't just lie down when they close."

This story will be updated.

Contact Jeff Bollier at (920) 431-8387 or jbollier@gannett.com. Follow him on Twitter at @GBstreetwise.