Forman Mills Fought Off Bankruptcy but Faces New Legal Battles
Forman Mills has some legal issues it still needs to wrap up.
The off-price chain is set to be acquired by discount retailer Shoppers World save 43 stores and staff jobs in Delaware, Illinois, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania and Wisconsin. But it’s unclear whose responsible for the discount retailer’s legal issues right now. There’s no word on whether Forman Mills has insurance policies that could help it out.
More from Sourcing Journal
Macy's to Pay $10.5 Million in Class-Action Lawsuit Settlement
Retailer Whose CEO Appeared on 'Undercover Boss' Acquiring Near-Bankrupt Forman Mills: Report
When the company filed a June 12 Wisconsin WARN notice telling the state it was planning to terminate workers there, chief financial officer Kevin Hess brought up the possibility of Forman Mills going bankrupt if it couldn’t clinch a sale.
Forman sells discount men’s, women’s and kids’ apparel and accessories at deep discount. It gets merchandise from closeouts or or when manufacturers have surplus from canceled orders. It also sells toys and home goods.
Given that Forman Mills customers are hard-hit when inflation sends prices rising, many assumed that was the cause of the the chain’s troubles. But now it seems that legal problems provoked some of its financial distress.
Forman employees who had biometric information such as fingerprints and hand scans collected at a store in Illinois between May 5, 2015 and Sept. 1, 2020 filed a privacy class action lawsuit in the Circuit Court of Cook County in September 2020. The retailer is accused of violating the state’s Biometric Information Privacy Act by collecting the data without providing proper disclosures. Last month, Forman Mills—without admitting guilt—agreed to pay a $2.38 million settlement. A final court hearing to approve the settlement is set for Aug. 22.
Forman Mills also is facing a class-action lawsuit filed last month in a New Jersey federal district court alleging that it violated federal and state laws when it laid off more than 50 headquarters employees without sufficient notice or severance. On Monday, the district court issued a gag order that covers data concerning current and former employees, as well as trade secrets and other competitively sensitive business information connected to Forman’s operations.
In a separate case, the retailer has sued Crown Enterprises in a Wayne County Circuit Court in Michigan, the Detroit Free Press reported last week. Forman Mills is charging its landlord at the Bel-Air Centre for trying to push it out before its lease expires in February 2026. It alleged that Crown Enterprises wants to redevelop the shopping mall. Forman also said the landlord refused to accept May and June rent payments, and that Crown eventually terminated the lease. Crown did not respond to a request for comment by press time.
