Related coverage:
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
- June 2006: Workers convinced Empire Rubber to enter liquidation
- July 2006: Hopes pinned on asset sale
- July 2006: Firm’s assets strips, employees could lose entitlements
- May 2007: 120 jobs lost at Empire Rubber
- August 2007: Hyon boss quizzed on Empire collapse
- September 2013: Empire Rubber trial begins
- November 2013: Verdict possible by end of 2014
A 10-year battle to recover full worker entitlements from the collapse of Bendigo business Empire Rubber has ended in a $4.5 million settlement, but former workers will not see a cent of the money.
The protracted legal saga ended with the settlement in May, but legal fees and litigation costs were higher than the amount eventually paid out.
Huon Corporation, operating as Empire Rubber, went into liquidation in June 2006 resulting in more than 300 job losses and million owing in employee entitlements.
Legal proceedings started against insurance company CBL Insurance in 2006 in an attempt to recover their lost entitlements.
CBL Insurance had created a Financial Insurance Policy after the takeover of Empire Rubber in December 2005, which included a $7 million indemnity clause should the company go under in the first 12 months.
After a lengthy legal battle, liquidator Grant Thornton confirmed to workers in a letter dated May 16, they would not see any of the settlement.
“Whilst we ultimately recovered funds from CBL, its process of disputing every step and action has meant the funds recovered were exhausted in trying to get the money back,” the letter reads.
“We have spoken to a number of the certain employees in recent months as we pursued a further dispute with the funder, LCM Litigation, in seeking to create a fund to meet some dividend. This has proven fruitless.
“Therefore we must conclude in advising there are no prospects of a return to employees from the CBL Insurance monies.”
Of the eventual pay out, 45 per cent went to LCM Litigation Funding while the rest was absorbed by legal fees.
The $7 million was first demanded from CBL in December 2006. The insurance policy had the amount as indemnity should Empire Rubber go under within 12 months of the takeover, but the company contested the validity of the claim on a number of grounds.
Employees received a $9.5 million pay out from the government-funded General Employee Entitlements and Redundancy Scheme in November 2007. The money covered annual and long service leave, and 16 weeks redundancy pay.
Legal proceedings were launched in 2011 to claim $4.4 million of the remaining $5.8 million shortfall.
CBL objected to the claim under the Insurance Bond for years and fought the legal battle until May this year.
The trial in the Supreme Court ran from October 2013 until a final judgement in May 2015, which CBL appealed.
The appeal was set down for February, but the parties eventually reached the $4.5 million settlement.
Former employees left empty handed
Former Empire Rubber employee Shane Hogan was owed $15,000 in entitlements after the company went into administration.
His wife Tracy Hogan, who left the company before it went under, said it was a disappointing outcome for all involved.
“Five weeks ago we were told there would be money, but we always thought we’d believe it when we see it,” she said.
“To get a letter saying that it’s all been eaten up in fees is very disappointing.
“I think we were lucky to get what we got in the end. If the site wasn’t 100 per cent union, I doubt we would have got anything at all.”
The couple still live in Bendigo, but say they are the lucky ones because they do not have children or home repayments.
Mrs Hogan said a lot of people were relying on an eventual payout.
“A lot of people who were laid off did not gain employment afterwards, so they were really relying on getting that money,” she said.
The National Union of Workers has encouraged all workers who lost out from the litigation process to attend a meeting at 5.30pm on Thursday at the Bendigo Trades Hall.