California Apparel News

The U.S. Bankruptcy Court has ruled in favor of the Department of Labor (DOL) having control over a “lock box” that was set up to reimburse 240 former Wins of California employees who went unpaid for three months before the company’s San Francisco plant was shut down by authorities last August.

There is approximately $450,000 in the lock box, which comes from monies collected as accounts receivable in the Wins case. The money in the lock box stems from the sale of goods manufactured by Wins during the time of the labor law violations.

The money was collected by the DOL under the hot goods provision of the Fair Labor Standards Act.

Judge Thomas E. Carlson held that the amount in the lock box is not subject to the bankruptcy case, according to Marci Seville, the director of the Women’s Employment Rights Clinic at Golden Gate University Law School, who attended the June 19 hearing at the U.S. Bankruptcy Court in San Francisco.

Seville said about 50 former Wins employees turned up for the hearing to support the DOL’s effort to retrieve funds to help pay employees’ back wages.

Tino Serrano, a spokesman for the DOL, said the department set up the lock box account last October to set aside money that would be used solely to reimburse workers for lost wages.

Last April, Lynn Schoenmann, the state-appointed trustee for Wins owners Jimmy Quan, Anna Wong and Suzy Wong (who filed for bankruptcy protection under Chapter 7 last year), filed a complaint against the DOL in an effort to gain full control over the lock box monies. Schoenmann maintained that because Wins is in bankruptcy there should be an automatic stay to prevent all legal proceedings surrounding the lock box funds, and that all accounts receivable should be handed over to the court.

Wins owners operated several apparel companies at the time they were found in violation of operation, but only Wins of California and Wins Fashions are included in the bankruptcy.

Neither Schoenmann nor Wins owners were available for comment at press time.

At the hearing, Judge Carlson ruled that all decisions pertaining to the lock box monies should be heard by the Federal District Court and not in bankruptcy court.

According to Seville, the judge said the Wins case is an exception to the automatic stays procedure, mainly because the DOL is adhering to policies outlined in the Fair Labor Standards Act.

Seville, who represents some of the workers involved in the case, said, “He recognized the policy issues underlying the basic labor standards and federal law enforcing those policies and he recognizes the fact that it’s not just about money, it’s about the workers.”

Sweatshop Watch co-director Nikki Bas said she was pleased with the judge’s decision not to release the funds in the lock box. “This is one of the few victories [the workers] have had in this long case,” said Bas. —Claudia Figueroa