Drummond Woodsum Forms Group to Advocate for Employees in Merrymeeting Behavioral Health Bankruptcy
Employees of bankrupt mental health care provider Merrymeeting Behavioral Health Associates, Inc. have organized a group to advocate for their interests in the company’s bankruptcy case. The group has hired the prominent Portland law firm of Drummond Woodsum as its legal counsel and filed papers with the U.S. Bankruptcy Court for the District of Maine disclosing the group’s intention to act collectively to assert claims related to their abrupt layoff in violation of state and federal employment statutes.
Merrymeeting filed for chapter 7 bankruptcy relief on May 24, 2016. Anthony Manhart of Portland has been appointed as the trustee to oversee the liquidation of the company’s remaining assets and distribution of the proceeds to creditors, including former employees.
Until shortly before its closure, Merrymeeting employed nearly 200 employees across central and southern Maine. Through its highly-trained professional staff, the Brunswick-based company provided outpatient services to more than 400 individuals with mental health and developmental disability issues. On April 1, 2016, the company suddenly closed its doors, citing pending changes to MaineCare reimbursement as the reason for the closure.
“Merrymeeting and its chief executive, Jim Talbott, left clients without essential services and employees without a way to earn a livelihood,” said Jeremy R. Fischer, the group’s chief legal counsel and leader of Drummond Woodsum’s Bankruptcy, Restructuring & Creditors’ Rights practice group. “We will work closely with the chapter 7 trustee to investigate all avenues of repayment for employees and other creditors.”
Merrymeeting’s employees are entitled to priority in repayment under the Bankruptcy Code. Specifically, under section 507 of the Bankruptcy Code, wages and other compensation owed to employees of a bankrupt company are entitled to second priority, behind only the administrative costs of the chapter 7 trustee. Employee claims are subject to priority up to a cap of $12,475 per employee.