Defunct Love's Bakery sued over ex-worker benefits

·3 min read

Oct. 15—Two union trusts representing former Love's Bakery employees have sued the company for allegedly shortchanging workers on benefit payments upon ending nearly 170 years of business in March.

Trustees of a pension fund and a health fund for the International Longshoremen's and Warehousemen's Union Local 142 filed the lawsuit Tuesday in federal court in Honolulu, claiming that the kamaaina bakery owes the funds about $400, 000.

Love's, which employed 231 workers, shut down in March.

Chuck Choi, an attorney representing Love's, said company officials were surprised by the lawsuit because they believed a $1 million settlement payment to the union in August addressed all back pay and benefits owed to former employees.

Earlier this year after Love's shut down, the union and the company negotiated how to settle claims involving severance pay, unpaid vacation and other benefits, according to Choi.

"The company's understanding was that the settlement resolved all claims under the collective bargaining agreement, " he said.

A union representative declined comment because of the litigation.

The trust funds claim that locally run Love's didn't sufficiently contribute to the two funds between January and March and thus owes $48, 344 including penalties and interest allowed under federal law.

The lawsuit also claims that a September audit of payments to the funds revealed a shortfall of $220, 328 between 2015 and the shutdown, which with interest and penalties increased to $297, 999.

A third allegation in the complaint is that Love's owes $59, 399 for withdrawing from the pension fund in 2017 as a "withdrawal liability " under federal law.

The lawsuit filed by attorneys with Yee &Kawashima LLLP said Love's has not made up for the allegedly delinquent payments despite formal demands.

Under a collective bargaining agreement between Love's and the ILWU, Love's is liable for all court and collection costs as well as reasonable attorney's fees in relation to fund obligation disputes that result in litigation, according to the lawsuit.

Love's announced its closing plans March 1, saying that it had suffered a dramatic revenue decline triggered by the impact from the coronavirus pandemic, was seriously delinquent on rent and couldn't qualify for a second forgivable federal Paycheck Protection Program loan after receiving an initial $2.8 million loan in 2020.

The company said it had lost more than 20 % of its revenue last year when sales from hotels, restaurants and other tourist-dependant outlets dried up.

"With the decline in revenue and the increasing expenses to keep the bakery running, we have made the difficult decision to cease operations as a faltering business, " the company said in a layoff notice.

Love's had nearly 1, 800 commercial customers through which roughly 400, 000 bread loaves were distributed weekly along with other baked goods under brand names including Love's, Wonder Bread, Roman Meal, Hostess, Little Debbie and Mrs. Freshly's.

The company was established in Honolulu in 1851, spent several decades under the ownership of baking companies on the mainland and Japan, and then returned to local ownership in 2008.

Love's did not file bankruptcy to discharge any unpaid debts, but has been liquidating assets.

The company sold a license to a Portland, Ore.-based bakery to continue selling baked goods under the Love's name. Financial terms of that deal were not disclosed.

Love's also has sold over 2, 500 items through several auctions between April and earlier this month that generated proceeds from equipment, ingredients, product inventory, memorabilia and other things.

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