Hoboken Closes Doors, Suppliers File Suits

Wayne, NJ, November 6, 2007--Monday morning Jodi Riley, payroll manager for the now-closed Hoboken Wood Flooring LLC in Wayne, handed out what paychecks she had left to about 50 employees gathered at its headquarters and advised them to file claims with the state's Department of Labor for unpaid wages, according to the Record.

The newspaper said that angry and confused former employees had come to work after more than 100 people were laid off last week in Wayne and at the Pompton Plains warehouse. Notices had gone out last week advising people that their jobs would be terminated in 30 or 60 days. The offices were locked Monday when they arrived.

No one answered the doorbell at the Wayne office on Monday and further attempts to contact senior management through a security guard at the office were unanswered.

The company said it was exempted from the WARN Act -- which requires that employees receive 60 days' notice prior to plant closings or layoffs if the company has 100 or more workers -- because it was seeking funding in order to stay open and giving notice would set back opportunities to raise new capital.

Craig S. Dean, managing director of AEG Partners LLC, the Chicago-based firm handling Hoboken Wood Flooring's restructuring, sent an e-mail to managers and other employees around 2 a.m. Monday advising them that "as of late Sunday evening, the company's lenders have elected to stop funding the business on a go-forward basis."

A message was left on Dean's voice mail and a phone call was not returned.

Many of the former customer service staffers, truck drivers and merchandising workers said they had not been paid for working last week or for working overtime.

"They're not processing payroll," said Riley. "People are due overtime from the week of Oct. 27 and last week."

She said the company owed between $400,000 and $500,000 in overtime pay to about 150 employees from the Wayne and Pompton Plains offices.

The workers say they also are without health insurance. That's because the company didn't renew its COBRA insurance policy, said Riley, and as of Oct. 31, those benefits ended for Hoboken Wood Flooring's employees. The Consolidated Omnibus Budget Reconciliation Act provides former employees the right to temporary health coverage at group rates.

It concerns her, she said, as a single mother with three children, because she's on medication, and her son was one of those recently laid off.

The lack of health insurance worries Nick Loporto, who worked in customer service. The married 31-year-old Totowa resident is diabetic and has a 17-month-old child.

"Now I got an outstanding bill and no insurance," he said.

Despite a year of companywide layoffs of about 500 workers at its 20-plus locations along the East Coast as well as closures at the company's two Texas locations, employees say business was going on as usual. Trucks were coming and going carrying products such as hardwood floors, stone and tile until last week, they said. Warning flags were signaled about two weeks ago when Riley said checks started bouncing and the stores couldn't get products delivered.

Two of Hoboken Wood Flooring's hardwood flooring suppliers -- Columbia Flooring Inc. in Portland, Oregon, and Millwood Specialty Flooring Inc. in Ellijay, Georgia -- filed a joint lawsuit in Newark last week for $1.02 million they say is owed to them from Hoboken Wood Flooring.

Commercial business development manager Jerry Pryor, who was also director of the company's largest showroom at the D&D Building on Third Avenue in New York, said he could see the company was in trouble.

Sales were down 25% each month for the past year, Pryor said, because of the downward spiral in the housing industry, competition from manufacturers shipping directly to retailers, and the company's push to expand nationally and eventually go public.

"New York City was carrying the majority of the company, and we were selling commercially," said Pryor. But, he added, "residentially we were dying for a good year. I think we got too large, too quick."

He said Hoboken Wood Flooring owes more than $50 million to its vendors and the company is taking steps to liquidate $25 million in inventory from the New York and New Jersey locations.