Dismissed employees file WARN Act class action lawsuit against insolvent US Logistics Solutions

As expected, bankrupt US Logistics Solutions is facing a class action lawsuit from former employees after the company was unexpectedly forced to close its doors last week.

The company, owned by private equity firm Ten Oaks Group, filed for liquidation, or Chapter 7 bankruptcy, last week and laid off all employees without warning.

However, the Worker Adjustment and Retraining Notification Act (WARN Act) requires employers with more than 100 employees to provide 60 days’ notice in the event of mass layoffs. The company missed that deadline and is now facing a class action lawsuit this week from employees demanding wages and benefits for those 60 days.

The complaint, filed by former employee Robert Munro, states: “Defendant failed to pay Plaintiff and the other similarly situated former employees their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for sixty (60) calendar days following their respective terminations. In addition, Defendant failed to make 401(k) contributions and to provide them with health insurance coverage and other employee benefits under ERISA for 60 calendar days following the date of their respective terminations.”

While media and the lawsuit point to about 2,000 employees, Ten Oaks said The Loadstar that US Logistics Solutions actually had 870 direct employees, 62 independent contractors, and 322 workers contracted through third-party agencies.

US Logistics Solution has estimated liabilities between $100 million and $500 million and estimated assets between $50 million and $100 million.

Ten Oaks told The Loadstar that its third-party lender “refused to proceed with financial support of US Logistics Solutions, leaving it with no choice but to file for Chapter 7 bankruptcy.” It also said the company was already “in turmoil” before 2021, when it was part of Forward Air – which is among hundreds of names listed as creditors.

Ryder Truck Rental, meanwhile, is trying to get its vehicles back after bankruptcy proceedings resulted in an automatic stay of payments that prevents creditors from paying their debts until the court case is complete. But Ryder, which is owed about $615,000, argued that its trucks are scattered across the southern and eastern U.S. at U.S. Logistics Solutions truck depots, which may not currently be monitored or secured.

“The leased vehicles are worth several million dollars. Accordingly, Ryder’s property, the leased vehicles, are not adequately protected. Urgent assistance is needed to enable Ryder to recover and secure the leased vehicles,” it said.