MERIDEN — New England Motor Freight has filed for Chapter 11 bankruptcy and has laid off 122 employees at its trucking terminal on Research Parkway.
As part of a plan to close its operations across the U.S., New England Motor Freight closed its 475 Research Parkway terminal March 1, according to a filing with the state Labor Department. The 122 layoffs occurred between Feb. 15 and March 1.
“Any time we see a loss of business in our city, it’s disappointing,” said Mayor Kevin Scarpati, who received a letter from the company on Feb. 25 notifying him of the closure.
Scarpati doesn’t know how many of the laid-off employees are Meriden residents.
“It’s going to be an impact to our community in one way or another,” he said.
NEMF, one of the country’s largest trucking companies with terminals through the Northeast and mid-Atlantic, voluntarily filed for bankruptcy at the recommendation of its advisers on Feb. 11 “to facilitate an orderly wind-down of its operations,” the company said in a statement.
“We have worked hard to explore options for New England Motor Freight, but the macro-economic factors confronting this industry are significant,” Vincent Colistra, chief restructuring officer, said in a statement announcing the bankruptcy. “Following two years of losses, and with continuing and unsustainable rises in overhead as well as a severe industry shortage of drivers, we have concluded that the company has no choice but to proceed with an orderly wind-down of operations in a Chapter 11 proceeding.”
Company representatives couldn’t be reached for further comment. A voice mail message at the company’s corporate headquarters said the office was closed.
The company, founded in 1977, is based in Elizabeth, New Jersey, and is owned by Paul McCartney’s father-in-law. The company has about 40 terminals throughout the Northeast, Midwest, Mid-Atlantic and Puerto Rico and provides less-than-truckload carrier services. Less-than-truckload operators combine smaller orders from multiple customers on each truck.
The Research Parkway terminal was the company’s only in Connecticut. The commercial building is 516,622 square feet and the parcel is assessed in total at $1.9 million, which includes the value of the building, land and “yard items,” according to city records.
The bankruptcy filing follows what many consider the best year for trucking companies in recent history, as strong freight volumes and tight capacity drove up the prices shippers pay for truck transportation, the Wall Street Journal reported.
The bankruptcy filing came a month after the company announced a 5.4 percent general rate increase that took effect Feb. 4. The company called itself “one of the most financially stable regional carriers in the Northeast” on its website.
The Wall Street Journal report said this is the largest trucking bankruptcy since 2002, when Consolidated Freightways Corp. shut down, according to Satish Jindel, president of industry research group SJ Consulting Group Inc.
The company this week agreed to boost the severance package offered to about 2,500 full-time employees after they filed a class-action complaint claiming the company did not provide them with proper notice of the layoffs under the federal WARN Act.
The law requires employers to provide workers with 60 days’ notice ahead of a closing or mass layoff, but hundreds of the company’s employees reported getting an informal heads-up only days before working their last shift.
The amended severance package provides up to an additional $2.7 million to the workers, a roughly 20 percent increase from the original proposal, Chuck Ercole, a partner at Klehr Harrison Harvey Branzburg LLP in Philadelphia and one of the attorneys representing the employees, told the Morning Call newspaper in Allentown, Pennsylvania.
The settlement allows each full-time employee, union and nonunion, to get eight weeks of fully paid health care benefits and at least 14½ days of pay — up to five weeks pay if the workers had more than two weeks of unused vacation and time off, Ercole told the paper.
Most of the employees laid off in Meriden are represented by the International Association of Machinists and Aerospace Workers, AFL-CIO Local 447 of District 15, according to the letter the company sent to Scarpati.
The association couldn’t immediately be reached for comment.
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