Paramount heads into receivership, asset sale
Lori Searles is busy sending out résumés, going on interviews and networking after losing her job at Paramount Cards. At the same time, she’s still taking phone calls from some of the 126 employees displaced when the company suddenly closed its Pawtucket headquarters July 21.
Searles, who was vice president of human resources for Paramount Cards, said executives gave official notice at noon that day – a Friday – telling employees not to come in on Monday.
“Was it a shock? Absolutely,” she said. “It was a very difficult day.”
Searles said it was especially hard for some of the long-term employees who’ve spent 20 to 30 years working for the 100-year-old Rhode Island-born company, which had been the nation’s third-largest greeting card manufacturer.
“This did come very quickly,” said Brian Dobson, of Dobson Communications Inc., a former spokesman for Paramount Cards.
Dobson said company’s consolidation of production in Cambridge, Ontario, caused the closure. Last fall, Paramount moved production equipment to its facility in Canada, laying off 270 workers in Pawtucket, though the company gave them three to six months’ notice.
It turns out the consolidation was “more expensive than they had anticipated,” Dobson said, causing the company’s lenders and investors to pull out and leaving about 1,200 people jobless in the United States and Canada, including the 126 employees in Pawtucket, who received no severance pay.
It’s a familiar scenario, especially in manufacturing, said George Burke, special projects manager for the R.I. Department of Labor and Training’s Adult and Dislocated Worker Unit.
First, company executives lay off the production workers, he said. Then they promise the administrative staff they’ll keep their headquarters in Rhode Island. But really, it’s just delaying the inevitable closure.
Burke said about 50 to 60 companies in Rhode Island close or issue substantial layoffs each year. Last year, he organized workshops for 4,200 displaced workers.
Paramount Cards escaped having to give 60 days’ notice to employees by qualifying as a “faltering company” under the federal Worker Adjustment and Retraining Notification (WARN) Act, he said.
The WARN Act states that a “faltering company” is not required to give notice of a layoff or closing “when, before the plant closing, it is actively seeking capital or business, which if obtained would avoid or postpone the layoff or closure.”
Citizens Bank had petitioned the state to place Paramount Cards in receivership last week, stating that the company owes the bank more than $42 million, said Allan M. Shine of Winograd, Shine & Zacks PC in Providence. Shine was appointed temporary receiver last Monday. A Superior Court hearing on Aug. 16 will determine whether he becomes permanent receiver for the case.
“This is going to be a sale of assets,” Shine said. “I’ve had inquiries from more than 10 interested parties. Several are well-known national companies.” (He would not disclose the company names.)
If the court app-roves Citizens’ claim, Shine said, the proceeds from the sale of assets – after court costs are paid – will go to the bank. Paramount Cards did not object to the receivership.
The top concern for Paramount’s former employees is benefits, Searles said, with their health care benefits slated to run out today. But Searles said she is working with Blue Cross & Blue Shield of Rhode Island and Delta Dental to obtain extended health care benefits from the state for each employee.
The challenge is finding them and letting them know those resources are available, Burke said. Normally, his unit looks at filings for unemployment to find contact information of displaced workers.
In the Paramount Cards case, Searles made an electronic list of employees’ names and addresses available, Burke said. “She really cares about the placement of employees.”
Burke and staff at NetworkRI have used that list to mail fliers announcing unemployment orientation workshops, as well as career fairs taking place during the next few weeks.
“A number of companies have called to talk to the displaced workers,” Burke said. Five companies have already committed to a career fair for those laid off from Paramount Cards. They include Cox Communications, Hasbro, and Toray Plastics.
“Hopefully, we can get people plugged in as quickly as we can,” Burke said.
He said many of Paramount’s former employees still have not filed for unemployment insurance, which averages around $492 per week for up to 26 weeks.
“Once a company closes, people get wrapped up in their own problems,” he said.
“They’re probably still in shock.”
