20-11422-mg Doc 160 Filed 05/20/21 Entered 05/20/21 22:12 ...

Mayerson & Hartheimer, PLLC Sandra E. Mayerson, Esq. David H. Hartheimer, Esq. 845 Third Avenue, 11th Floor1 New York, NY 10022 Tel: (646) 778-4381 Fax: (646) 778-4384 [email protected] [email protected]

Counsel for Debtors and Debtors-in-Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: RM BAKERY LLC, et al.,2 Debtors.

Chapter 11 Case No. 20-11422 (MG) Jointly Administered

NOTICE OF APPLICATION OF RM BAKERY LLC AUTHORIZING A SETTLEMENT WITH THE NLRB AND

MAKE THE ROAD NEW YORK PURSUANT TO RULE 9019 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE

PLEASE TAKE NOTICE, that on June 7, 2021, at 3:00 p.m. (Prevailing Eastern

Time), a hearing (the “Hearing”) will be held before the United States Bankruptcy Judge

Martin Glenn, at the United States Bankruptcy Court, Southern District of New York, One

Bowling Green, New York, NY 10004-1408, or as soon thereafter as counsel can be heard, to

consider the application (the “Application”) of RM Bakery LLC, Debtor and Debtor-in-

Possession herein (“Debtor”), on behalf of itself and its parent company, BKD Group LLC,

also a Debtor and Debtor-in-Possession herein (“BKD”, and together with the Debtor, the

“Debtors”) for entry of an order substantially in the form that was submitted with the

1 During the coronavirus pandemic, please address all mail to: 48 Seneca Street, Dobbs Ferry, NY 10522. 2 The Debtors in these Chapter 11 Cases and the last four digits of each Debtor's taxpayer identification number are as follows: RM Bakery LLC (7954) and BKD Group LLC (0624).

Hearing date: June 7, 2021, at 3:00 p.m. Response date: May 31, 2021 at 4:00 p.m.

20-11422-mg Doc 160 Filed 05/20/21 Entered 05/20/21 22:12:15 Main Document Pg 1 of 40

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Application (the “Order”), pursuant to Rule 9019 of the Federal Rules of Bankruptcy

Procedure (the “Bankruptcy Rules”) approving the proposed settlement agreement entered

into among the Debtor, Region 3 of the National Labor Relations Board (“NLRB”), and Make

the Road New York as Charging Party for certain individuals (“MRNY”, and together with the

Debtor and the NLRB, the “Parties”) and authorizing the Debtor to enter into same and into

the NLRB Compliance Stipulation attached as an exhibit thereto.

PLEASE TAKE FURTHER NOTICE that objections to the Application or the

requested relief therein, if any, (i) shall be made in writing, (ii) shall conform to the Bankruptcy

Rules and the Local Bankruptcy Rules for the Southern District of New York, (iii) shall set

forth the basis for the response or objection and the specific grounds therefore, and (iv) shall

be filed with the Court electronically in accordance with General Order M-399 by registered

users of the Court’s filing system (the User’s Manual for the Electronic Case Filing System

can be found at http://www.nysb.uscourts.gov), with a copy emailed to the Court at

[email protected], so as to be actually received no later than May 31, 2021 at

4:00 p.m. (Prevailing Eastern Time) (the “Objection Deadline”), and served upon the (i)

Debtors, c/o RM Bakery LLC, 220 Coster St., Bronx, New York, 10474, Attn. Mark Rimer,

[email protected] (ii) Counsel for the Debtors, Mayerson & Hartheimer, PLLC,

48 Seneca Street, Dobbs Ferry, New York 10522 (Attn: Sandra E. Mayerson, Esq. and David

H. Hartheimer, Esq.); [email protected] and [email protected]; (iii) Counsel to the

NLRB, Kwame Samuda, Trial Attorney, National Labor Relations Board, Contempt,

Compliance, & Special Litigation Branch, 1015 Half Street, S.E., 4th Floor, Washington,

D.C. 20003, [email protected], and Caroline V. Wolkoff, Esq., Attorney, National

Labor Relations Board, Region 3, 1A Clinton Ave., Albany, New York 12207,

[email protected]; (iv) Sarah Leberstein, Supervising Attorney, Workplace Justice,


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Make The Road New York, 46 Waller Avenue, White Plains, NY 10605,

[email protected];

(v) the Office of the U.S. Trustee, 201 Varick Street, Room 1006, New York, NY 10014 (Attn:

Richard Morrissey, Esq.),[email protected]; (vi) Counsel to FS Lender 2015 LLC,

Dov R. Kleiner, Kleinberg Kaplan, 500 5th Avenue, New York, NY

10110,[email protected]; (vii) Counsel to Pacific Western Bank, Successor by Merger to

Square 1 Bank, Brett S. Moore Esq. and Kelly D. Curtin, Esq., Porzio, Bromberg & Newman,

P.C., 156 West 56th Street, Suite 803, New York, NY 10019-3800, [email protected] and

[email protected]; and (vii) all persons and entities that have formally appeared and

requested service in these cases pursuant to Bankruptcy Rule 2002 (the “Rule 2002 Parties”).

PLEASE TAKE FURTHER NOTICE that in light of the COVID-19 pandemic, and

the Court’s General Order M-543 (“General Order M-543”), dated March 20, 2020, the

Hearing will only be conducted telephonically. Parties wishing to participate in the Hearing

must make arrangements through CourtSolutions LLC. Instructions to register for

CourtSolutions are attached to General Order M-543.

[Remainder of page intentionally left blank.]


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PLEASE TAKE FURTHER NOTICE that that if you do not timely file and serve a

written objection to the relief requested in the Application, the Bankruptcy Court may deem

any opposition waived, treat the Application as conceded, and enter the Order granting the

relief requested in the Application without further notice or hearing.

Dated: May 20, 2021 New York, New York

/s/ Sandra E. Mayerson Sandra E. Mayerson MAYERSON & HARTHEIMER PLLC 845 Third Avenue, 11th Floor New York, NY 10022 Tel: (646) 778-4380 Fax: (646)778-4384 [email protected] [email protected] Counsel for the Debtors and Debtors-in-Possession


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Mayerson & Hartheimer, PLLC Sandra E. Mayerson, Esq. David H. Hartheimer, Esq. 845 Third Avenue, 11th Floor1 New York, NY 10022 Tel: (646) 778-4381 Fax: (646) 778-4384 [email protected] [email protected]

Hearing Date: June 7, 2021 Hearing Time: 3:00 (prevailing eastern time)

Objection Deadline: May 31, 2021 Time: 4:00

Proposed Counsel for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: RM BAKERY LLC, et al.,2 Debtors.

Chapter 11 Case No. 20-11422 (MG) Jointly Administered

APPLICATION OF RM BAKERY LLC AUTHORIZING A SETTLEMENT WITH THE NLRB

AND MAKE THE ROAD NEW YORK PURSUANT TO RULE 9019 OF THE FEDERAL

RULES OF BANKRUPTCY PROCEDURE TO: THE HONORABLE MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGE:

RM Bakery LLC, Debtor and Debtor-in-Possession herein (the “Debtor”), on behalf of

itself and its parent company, BKD Group LLC, also a Debtor and Debtor-in-Possession herein

(“BKD”, and together with the Debtor, the “Debtors”) by and through its attorneys, Mayerson &

Hartheimer, PLLC (“M&H”), is seeking an Order pursuant to Rule 9019 of the Federal Rules of

1 During the coronavirus pandemic, please address all mail to: 48 Seneca Street, Dobbs Ferry, NY 10522. 2 The Debtors in these Chapter 11 Cases and the last four digits of each Debtor's taxpayer identification number are as follows: RM Bakery LLC (7954) and BKD Group LLC (0624).


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Bankruptcy Procedure (the “Bankruptcy Rules”), approving the proposed settlement agreement

(the “Settlement Agreement”) entered into among the Debtor, Region 3 of the National Labor

Relations Board (“NLRB”), and Make the Road New York as Charging Party for certain

individuals (“MRNY”, and together with the Debtor and the NLRB, the “Parties”), and

authorizing the Debtor to enter into same and into the NLRB Compliance Stipulation attached as

an exhibit thereto, and respectfully states as follows:

PRELIMINARY STATEMENT

1. This Application is submitted by the Debtor for the purpose of approving the

settlement embodied in the Settlement Agreement annexed hereto as Exhibit 1, and authorizing

the Debtor to enter into both the Settlement Agreement and the NLRB Compliance Stipulation

attached as Exhibit A thereto (the “Compliance Stipulation”).

JURISDICTION AND VENUE

2. This Court has jurisdiction over this motion pursuant to 28 U.S.C. §§ 157 and

1334.

3. Venue is proper in this Court pursuant to 28 U.S.C. § 1408 et seq.

4. The statutory predicate for the relief requested herein is Rule 9019(a) of the

Bankruptcy Rules and section 105, Title 11, United States Code (the “Bankruptcy Code”).

PROCEDURAL HISTORY AND BACKGROUND

5. On June 15, 2020 (the “Petition Date”), the Debtor filed a voluntary petition for

relief pursuant to Chapter 11 in the Bankruptcy Court for the Southern District of New York (the

“Court”) together with its parent company, BKD, which cases are jointly administered and

currently pending as Case No. 20-11422 before the Hon. Martin Glenn (the “Bankruptcy Case”).


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6. Prior to the Petition Date, MRNY, as the Charging Party, filed a charge with the

NLRB on behalf of Juan Carlos Abarca, Clayton Brown, Nestor Marquez, René Moran, and

Gilberto Paniura (the “Individuals”) alleging that the Individuals had been unlawfully terminated

from their alleged employment with the Debtor.

7. Although the Debtor disputed the charges, it never formally replied to them, and as

a result, on October 8, 2019, the NLRB issued an order granting a default judgment in favor of the

Individuals, requiring that the Debtor fulfill the Notification Requirements, the Expungement

Requirement, the Reinstatement Requirements, and the Back Pay Requirements3, as set forth more

fully in the Settlement Agreement (the “NLRB Order”).

8. On December 27, 2019, the United States Court of Appeals for the Second Circuit

entered judgment enforcing the NLRB Order in full (the “Judgment”) and issued its mandate that

same date.

9. There is no dispute that the Debtor satisfied the Notification Requirements and the

Expungement Requirement prior to the Petition Date. To date, no hearing has been held to

determine the amount of the Back Pay Requirements, and the Debtor continues to assert that it is

substantially less than the amounts suggested by the NLRB.

10. The Debtor asserts that it satisfied the Reinstatement Requirements in April 2020,

and that, as a result, no further backpay continued to accrue after April 2020. The NLRB disputes

the validity of the Debtor’s attempts to satisfy the Reinstatement Requirements and asserts that

backpay is continuing to accrue, creating a priority claim on behalf of each Individual, as well as

administrative claims for backpay accruing since the Petition Date.

3 Terms used herein but not defined have the meaning ascribed to them in the Settlement Agreement.


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11. Accordingly, the NLRB filed a proof of claim on August 24, 2020, docketed as

Claim No. 19, for backpay, interest, and taxes on behalf of the Individuals in the aggregate amount

of $285,906.08, of which, the NLRB took the position that $54,395.05 was a priority claim, and

$29,682.40 is an administrative claim. On that same day, the NLRB filed a motion for payment of

an administrative claim in the amount of the $29,682.40 [Docket No. 72]. Subsequently, on

December 11, 2020, the NLRB filed an amendment to its motion for payment of administrative

claim by increasing the administrative claim amount to $89,679, thereby increasing the overall

claim to $345,902.68 [Docket No. 123] (together with Docket No. 72, the “Administrative Claim

Motions”). Debtor disputes liability for priority and administrative claims, as well as the overall

amount of the NLRB claims.

12. In the meantime, the Debtor had scheduled each of the Individuals as holding

disputed Claims in the Bankruptcy Case, and had not scheduled the NLRB as a claimant. The

NLRB advised the Debtor that the NLRB is the proper claimant with authority to prosecute all

claims on behalf of the Individuals, and the Debtor has proceeded accordingly. On December 8,

2020, MRNY filed proofs of claim against the Debtor on behalf of each of the Individuals for

unsecured, unliquidated claims in the aggregate amount of $175,768.50, which have been docketed

as Claims Nos. 10011-10015 (the “Individual Proofs of Claim”). The Debtor objects to the

Individual Proofs of Claim filed by MRNY as invalid and duplicative of the NLRB’s claims. The

NLRB objects to the MRNY claims, as well.

13. The NLRB issued subpoenas post-petition allegedly pursuant to its police powers

against numerous parties, including parties whom the NLRB alleged were “Responsible Persons”

for the obligations of the debtor, including, without limitation, Mark Rimer, (“Rimer”) as agent

of the Debtor, and Featherstone Distribution LLC (“Featherstone”), which is a limited liability


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company which is not an affiliate of either of the Debtors as that term is defined in the Bankruptcy

Code, but in which Rimer has a 100% beneficial interest. The Debtor objected to the subpoena of

Rimer as its agent on the grounds that it violated the automatic stay. On information and belief,

Featherstone objected to its subpoena on the grounds that it is not an affiliate or “Responsible

Person” for the Debtor. The NLRB filed oppositions to the petitions to revoke that were filed by

the Debtor and Featherstone, in which it argued, in part, that the automatic stay did not apply, and

that the NLRB was permitted to reduce its backpay claims to liquidated judgments and to obtain

nonmonetary relief. See NLRB v. 15th Ave. Iron Works, Inc., 964 F.2d 1336, 1337 (2nd Cir. 1992).

On December 29, 2020, the Board denied the petitions revoke without a hearing, as, under NLRB

regulations, no hearing was necessary.

14. In light of the disputed claims, the pending Administrative Claim Motions, and the

continuing enforcement actions by the NLRB, which could result in an alleged liability against

BKD as a “Responsible Person”, the Debtor engaged in settlement discussions with the NLRB.

The NLRB and Debtor successfully came to a global resolution of all claims between them in this

Bankruptcy Case, as well as all claims against any putative Responsible Persons for the Debtor,

and all claims brought by MRNY on behalf of the Individuals. The NLRB embodied the settlement

in a Compliance Stipulation executed by itself, the Debtor and MRNY, which Compliance

Stipulation is subject to approval of this Bankruptcy Court and is attached to the Settlement

Agreement as Exhibit A.

15. The Debtor, by this Application, now seeks entry of an order approving the

Settlement Agreement annexed hereto as Exhibit 1, and authorizing the Debtor to enter into both

the Settlement Agreement and the Compliance Stipulation.

TERMS OF THE SETTLEMENT AND COMPLIANCE STIPULATION


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16. Reference is made to the Settlement Agreement and the Compliance Stipulation for

their complete terms and conditions. Below is a summary of the integral parts of the Settlement

Agreement and Compliance Stipulation, subject to this Court’s approval of this Application:

A. In settlement of the Backpay Requirements:

i. Claim No. 19 filed by the NLRB will be deemed allowed as a general

unsecured claim in the amount of $181,645.77.

ii. In addition, the NLRB will be deemed to have an allowed unclassified

administrative claim in the amount of $55,289.18 (the “Allowed Administrative Claim”).

iii. Any plan filed by the Debtor will provide that the Allowed Administrative

Claim will be paid in six (6) monthly installments. The first installment will be paid on the effective

date of the Debtor’s plan of reorganization, and each of the five (5) subsequent installments will

be paid at one-month intervals thereafter, such that the Allowed Administrative Claim will be paid

in full by that date which is five (5) months after the effective date of the Plan.

iv. No further administrative claims will accrue during the Bankruptcy Case as

a result of the Backpay Requirements.

v. The Debtor is authorized to enter into and implement the Compliance

Stipulation, which, among other things, sets forth the payee for the above claims, withholding

requirements, tax requirements, and the allocation among the Individuals.

vi. Claims Nos. 10011, 10012, 10013, 10014, 10015 filed by MRNY on behalf

of each of the Individuals will be permanently expunged as duplicative of the NLRB Claims, as

will the Debtors’ scheduling of such claims. The Individuals will file no further claims in the

Bankruptcy Case.

B. In full settlement of the Reinstatement Requirements:


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i. Rimer, a senior manager of the Debtors and a shareholder of BKD will

cause Featherstone, in which he owns 100% of the beneficial interest, to offer employment to the

Individuals within fourteen (14) days of Court approval of this Agreement. Rimer asserts that

Featherstone is in no way related to or affiliated with the Debtors, but he is willing to cause

Featherstone to make offers of employment in order to avoid litigation as to whether

Featherstone is a “Responsible Person”. All of the Parties agree that no one may use the fact that

Rimer has agreed to have Featherstone offer employment to the Individuals as evidence that

Featherstone is affiliated with the Debtors.

ii. Featherstone will offer the Individual’s employment as drivers at a salary

equivalent to other Featherstone starting drivers, currently between $16 and $17 per hour,

provided, that the particular Individual meets the requirements for employment as a driver

previously established by Featherstone, including, without limitation, the completion of the

following:

a. An employment application including name, address, Social

Security number, and employment history.

b. Executed I-9 form, including proof of employment eligibility.

c. Executed W-4 form for withholding.

d. A copy of both sides of a valid New York, New Jersey, or

Connecticut driver’s license.

e. Individual must pass a pre-employment drug test at a lab

designated by Featherstone.

f. Individual must own a smart phone and bring it to work.


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g. Individual must have or obtain a Department of Transportation

medical card. If the Individual needs to take a test to obtain one,

Featherstone will pay for the test.

iii. The Parties acknowledge and agree that all driver credentials are sent to

Featherstone’s insurance company and the Department of Transportation compliance advisor

(NECS) for a driver’s license check, including DMV extract, validity of license, and the like. If

any Individual cannot be hired as a driver either because he or she is not insurable or has significant

driving violations that make him or her unsuitable as a driver, either Featherstone or Debtor will

offer such Individual another job which may not pay as much. Debtor will consult with the NLRB

on the alternative job offer should this be required. Featherstone is not required to offer any other

job, and it is Debtor’s sole responsibility to work out a suitable alternative with the NLRB.

iv. Each of the Individuals who accept the employment offer must pass

Featherstone’s road test in a full-size cargo van or box truck. Should any of the Individuals not be

able to pass such test immediately, Featherstone will offer training for the driver’s test. During the

period that the Individual is a trainee, such Individual will be paid as a trainee, and not as a driver.

If the Individual cannot pass the Driver’s test within three months from the inception of his/her

employment, then either Featherstone or Debtor will offer the Individual another job which may

not pay as much. Debtor will consult with the NLRB on the alternative job offer should this be

required. Featherstone is not required to offer any other job, and it is Debtor’s sole responsibility

to work out a suitable alternative with the NLRB.

v. Once Featherstone has offered each of the Individuals employment on the

above terms, whether or not the Individual accepts the offer of employment, Debtor is deemed to

have satisfied its Reinstatement Requirements.


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vi. The NLRB has indicated that if Featherstone needs to lay off one or more

drivers in order to make room for the Individuals, it is unlikely that the NLRB will take action

against Featherstone for doing so.

C. General provisions of the Settlement:

i. So long as the Debtor’s plan of reorganization embodies the treatment of

claims as set forth in this Settlement Agreement and the Compliance Stipulation, the NLRB agrees

to vote its unsecured claim in favor of the plan.

ii. Once the Settlement Agreement is approved by the Court, if the Debtor

fails to comply with any terms of the Settlement Agreement or the Compliance Stipulation, if such

non-compliance is not remedied by the Debtor within 21 days of receipt of written notice from the

Regional Director of Region 3 of the NLRB, immediately, and without the need for any further

legal proceedings, the amount of the NLRB claims in this Bankruptcy Case will be deemed allowed

in the aggregate amount of $345,902.68, minus the total of any payments previously submitted to

the NLRB by the Debtor, allocated as follows: $89,679 as an allowed administrative claim,

$54,395.05 as an allowed priority claim, and $201,828.63 as an allowed unsecured claim.

LEGAL AUTHORITY FOR APPROVAL OF THE SETTLEMENT

17. Compromises and settlements are a normal part of the bankruptcy process.

Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390

U.S. 414, 424 (1968) reh’g denied, 391 U.S. 909 (1968), citing Case v. Los Angeles Lumber

Products Co., 308 U.S. 106, 130 (1939). The structure and provisions of the Bankruptcy Code

promote negotiation and settlement for the benefit of creditors in accordance with “the policy of

the law generally [which is] to encourage settlements.” In re Jackson Brewing Co., 624 F.2d 599


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(5th Cir. 1980). Resolution of claims through settlement furthers the goal of bankruptcy

administration to liquidate estate assets as rapidly as possible “consistent with obtaining the best

possible realization upon the available assets and without undue waste by needless or fruitless

litigation.” In re Carla Leather, Inc., 44 B.R. 457, 471 (Bankr. S.D.N.Y. 1984) aff’d, 50 B.R. 764

(S.D.N.Y. 1985).

18. Bankruptcy Rule 9019(a) permits this Court to approve settlements. The Rule

provides: On motion by the trustee and after notice and a hearing, the court may approve a

compromise or settlement. Notice shall be given to creditors, the United States Trustee, the

Debtors, and indenture trustee as provided in Rule 2002, and to any other entity as the court may

direct.

19. Neither Bankruptcy Rule 9019 nor any section of the Bankruptcy Code explicitly

sets forth the standards by which a court is to evaluate a proposed settlement for approval. The

standards for approval of settlements in bankruptcy cases, however, are well established by case

law, focusing upon whether the purported settlement is reasonable and in the best interests of

creditors. In Anderson, 390 U.S. at 414, the Supreme Court concluded that the trial court must

make an informed, independent judgment as to whether a settlement is fair and equitable, stating:

There can be no informed and independent judgment as to whether a proposed compromise is fair and equitable until the bankruptcy judge has apprised himself of all the facts necessary for an intelligent and objective opinion of the probabilities of ultimate success should the claim be litigated. Further, the judge should form an educated estimate of the complexity, expense, and likely duration of such litigation, the possible difficulties of collecting on any judgment which might be obtained, and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise. Basic to this process in every instance, of course, is the need to compare the terms of the compromise with the likely rewards of litigation. Anderson, 390 U.S. at 424-25.


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20. The United States Court of Appeals for the Second Circuit has stated that the

responsibility of the Judge is “not to decide the numerous questions of law and fact raised by

appellants but rather to canvass the issues and see whether the settlement falls below the lowest

point in the range of reasonableness.” In re W.T. Grant Co., 699 F.2d 599, 608 (2d Cir. 1983), cert

denied sub. nom. Cossoff v. Rodman, 464 U.S. 822 (193). Accord, In re Gardi, 273 B.R. 4, 18

(Bankr. E.D.N.Y. 2002); In re Interstate Cigar Co., 240 B.R. 816, 822 (Bankr. E.D.N.Y. 1999);

In re Spielfogel, 211 B.R. 133, 143-44 (Bankr. E.D.N.Y. 1997); In re Purofied Down Products

Corp., 150 B.R. 519, 522-23 (S.D.N.Y. 1993). The assessment of a settlement only requires

identification of the issues in controversy “so that the bounds of reasonableness can be seen with

some clarity.” Carla Leather, 44 B.R. at 470.

21. In considering a proposed settlement, the court is guided by a lenient standard

consistent with the theory that “little would be saved by the settlement process if bankruptcy courts

[had to conduct] . . . an exhaustive investigation and determination of the underlying claims in

order to approve a settlement.” Purofied Down Products, 150 B.R. at 522-23. In Carla Leather,

the Court explained the policy underlying the abbreviated review of settlements under Bankruptcy

Rule 9019 as follows:

The very uncertainties of outcomes in litigation, as well as the avoidance of wasteful litigation expense, lay behind the Congressional infusion of a power to compromise . . . This could hardly be achieved if the test on hearing for approval meant establishing success or failure to a certainty. Carla Leather, 44 B.R. at 470; See also Purofield Down Products, 150 B.R. at 522-23.

22. In evaluating the propriety of a settlement, a court need not conduct a trial or even

a “mini-trial” on the merits to actually resolve the exact factual and legal issues. Interstate Cigar,

240 B.R. at 822; Spielfogel, 211 B.R. at 143-33. Rather, the court must simply consider whether

against the background of those issues, the settlement is reasonable. Newman v. Stein, 464 F.2d


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689, 692 (2d Cir. 1972), cert denied sub nom. Benson v. Newman, 409 U.S. 1039 (1972). See also

In re International Distribution Centers Inc., 103 B.R. 420, 423 (S.D.N.Y. 1991); In re Drexel

Burnham Lambert Group Inc., 134 B.R. 493 (Bankr. S.D.N.Y. 1991). In so doing, the court may

consider the settlement in the context of its familiarity with the history of the case, the complexity

of the claims alleged, the parties, and the context in which the claims and the settlement arose. See

Anderson, 390 U.S. at 444.

23. The settlement evaluation process is not designed to substitute the court’s judgment

for that of the trustee or debtor-in-possession. Carla Leather, 44 B.R. at 465. While a court is not

expected to “rubber stamp” the proponent’s proposed settlement, In re Ionosphere Clubs Inc., 156

B.R. 414, 426 (S.D.N.Y. 1993), the court should give considerable weight to the proponent’s

informed judgment that a compromise is fair and equitable. Anderson, 390 U.S. at 444;

International Distribution Centers, 103 B.R. at 423; Drexel Burnham Lambert, 134 B.R. at 496;

Carla Leather, 44 B.R. at 472. As stated by the district court in International Distribution Centers,

the court should give weight to the support of not only the proponent but of other counsel to a

settlement in determining the wisdom of the compromise. Id. at 423. Thus, a court should consider

both the proponents’ opinions and independently evaluate the arguments both for and against the

settlement to determine whether the settlement should be approved. Purofied Down Products, 150

B.R. at 523.

24. The court, apprised of the facts of the controversy and the risks and costs of the

litigation, is bestowed with broad discretion to approve settlements that fall within the range of

reasonableness. Purofied Down Products, 150 B.R. at 523; In re Texaco, Inc., 84 B.R. 893, 901

(Bankr. S.D.N.Y. 1988). The proposed settlement need not be ideal, but merely above the lowest

point in the range of reasonableness under the circumstances. See, W.T. Grant, 699 F.2d at 613 14;


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Newman v. Stein, 464 F.2d at 693; Purofied Down Products, 150 B.R. at 523-24. This concept of

a “range of reasonableness” recognizes “the uncertainties of law and fact in any particular case

and the concomitant risks and costs necessarily inherent to taking any litigation to completion.”

Newman v. Stein, 464 F.2d at 693. Thus, a court should not insist upon the best possible settlement,

but only that a settlement is within the range of reasonableness.

25. In deciding whether a settlement should be approved, courts in the Second Circuit

have considered some or all of the following factors:

a. The relative benefits to be received by creditors under the proposed settlement; b. The likelihood of success in the litigation compared to the present and future

benefits conferred by the proposed settlement; c. The prospect of complex and protracted litigation if the settlement is not

approved; d. The attendant expenses, inconvenience and delay of litigation; e. The probable difficulties of collecting on any judgment that might be obtained; f. The competency and experience of counsel who support the proposed

settlement; g. The extent to which the settlement is the product of arm’s length bargaining;

and not the product of fraud or collusion; h. The nature and breadth of any releases to be issued as a result of the proposed

settlement; and i. The paramount interest of the creditors and proper deference to their reasonable

views. See City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974); Ionosphere Clubs 156

B.R. at 414; Purofied Down Products, 150 B.R. at 522; International Distribution Centers, 103

B.R. at 422; In re Fugazy, 150 B.R. 103, 106 (Bankr. S.D.N.Y. 1993); Drexel Burnham Lambert,

134 B.R. at 497; Crowthers McCall, 120 B.R. at 287; Texaco, 84 B.R. at 901; In re Lion Capital


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Group, Inc., 49 B.R. 163, 175 (Bankr. S.D.N.Y. 1985); Carla Leather, 44 B.R. at 466. See 10

Collier on Bankruptcy, §9019.02 (15th Ed. Revised 1998).

26. In summary, the “very purpose of compromise is to avoid the trial of sharply

disputed issues and to dispense with wasteful litigation.” Newman v. Stein, 464 F.2d at 692.

27. The Debtor respectfully submits that the Settlement Agreement falls well above the

lowest point in the range of reasonableness.

28. The benefits to the creditors of not just the Debtor’s estate, but also the creditors of

BKD as well, are manifold. The NLRB may well have tried to hold BKD liable for its Claims

against the Debtor as a “Responsible Person”. As part of the Settlement Agreement, the NLRB has

agreed not to seek any payment from putative Responsible Persons, which avoids any claims

against the estate of BKD.

29. In addition, the Debtors and their creditors avoid the time and expense of continued

litigation, which would be significant. Not only would there be continued litigation on the

Administrative Claim Motions, but also, the Debtor would be obliged to object to the claims filed

on behalf of the Individuals, as well, not to mention the priority and general unsecured claims of

the NLRB. Prior to proceeding on such claims, it is likely that the Debtor would first have to

litigate the proper forum for assessing the amount of the claims against the Debtors. While the

Debtors assert that such determination should be made by the Bankruptcy Court, the NLRB asserts

that the assessment of Back Pay must be done at an NLRB hearing. This issue would need to be

litigated before one could even litigate the amount of the claims at issue, necessitating the

expenditure of a great deal of time and money. Furthermore, if the NLRB were to prevail, to date,

the NLRB hearings have proven to be a very unfavorable forum to the Debtors. The complexity

of the litigation makes its outcome uncertain. Rather than be exposed to this lengthy, time-


15

consuming, and expensive litigation, the proposed settlement fixes the amount of the claims of not

just the NLRB, but also of the Individuals, which will lend itself to a much smoother claims

administration process in the Bankruptcy Case.

30. The Debtors believe that the significant compromise in the amounts claimed by

the NLRB also demonstrates the reasonableness of the settlement. More importantly, the

settlement cuts off any continued accrual of administrative claims for purported Back Pay

Requirements. Absent the settlement, the amounts claimed by the NLRB could be significantly

higher by confirmation, and make it much more difficult for the Debtors to propose and implement

a plan of reorganization.

31. Furthermore, given the large administrative and priority claims put forward by the

NLRB, it was imperative that such claims be resolved prior to the Debtors being able to propose a

plan of reorganization; since, the Debtors would need to demonstrate the ability to pay their priority

and administrative claims at confirmation. By eliminating the priority claim and allowing the

administrative claim in a fixed amount to be paid over six months, the Debtors’ ability to soon

propose a plan of reorganization is much enhanced, to the benefit of all creditors. Accordingly, the

Debtors submit that the present and future benefits conferred by the proposed settlement, and the

avoidance of the uncertainty, expense, and time of further litigation weigh heavily in favor of

approving the settlement.

32. A significant stumbling block to resolving the claims which are the subject of the

settlement was the type of job to be offered to the Individuals. The Individuals had previously

worked as drivers, but the Debtors now outsource their deliveries to save money, and do not have

a comparable position to offer. This appeared to be an insurmountable problem, but due to the

good graces of the Debtor’s senior manager, Mark Rimer, the Individuals will be offered similar


16

employment at another company in which he has a beneficial interest. Therefore, a significant part

of the settlement comes at no cost whatsoever to the Debtors and their creditors.

33. The proposed settlement is also beneficial because it resolves all outstanding issues

among the Debtors, the NLRB, MRNY, and the Individuals. The finality is beneficial to both

Debtors, as well as their estates and creditors.

34. Counsel for the Debtors is experienced bankruptcy counsel, and counsel to the

NLRB and MRNY are specialists in the subject matter of these claims. The fact that all such

counsel support the settlement further demonstrates that the settlement should be approved.

35. Finally, due to the delays in scheduling a hearing on the Administrative Claim

Motions, this Court is only too well aware that the Parties were engaged in difficult arm’s-length

negotiations to both resolve and document a settlement. Considerable effort has gone into the

good-faith resolution of these claims by all Parties, and their belief in the appropriateness of the

settlement should be upheld.

36. Therefore, the Debtor, in the proper exercise of its business judgment, determined

that this proposed settlement is in the best interests of the creditors of this estate.

37. Based on all the above, the Debtor submits that the Settlement Agreement falls

above the lowest point in the range of reasonableness and should be approved.


17

CONCLUSION

WHEREFORE, for all of the reasons set forth herein, the Debtor respectfully requests

that this Honorable Court enter an Order: (i) approving the Settlement Agreement in its entirety,

(ii) authorizing the Debtor to enter into and implement both the Settlement Agreement and the

Compliance Stipulation, (iii) granting the Allowed Claims of the NLRB as set forth in the

Settlement Agreement, (iv) expunging the Individual Proofs of Claim as set forth in the Settlement

Agreement, and (v) granting such other and further relief as this Court deems just, proper and

equitable.

Dated: May 20, 2021 Respectfully submitted, New York, New York

MAYERSON & HARTHEIMER, PLLC By: s//Sandra E. Mayerson Sandra E. Mayerson

David H. Hartheimer 845 3rd Ave., 11th floor New York, NY 10022 Tel.: 646-778-4381 Fax: 646-778-4384 [email protected] [email protected] Proposed Counsel for the Debtors


EXHIBIT 1


SETTLEMENT AGREEMENT

This Settlement Agreement made as of this 18th day of May, 2021, by and among RM Bakery,

LLC, debtor and debtor-in-possession (“Debtor”), Region 3 of the National Labor

Relations Board (“NLRB”), and Make The Road New York (“MRNY”, and together with

Debtor and NLRB, the “Parties”).

WHEREAS, in 2019, MRNY, as the Charging Party, filed an unfair labor practice charge with

the NLRB on behalf of Juan Carlos Abarca, Nestor Marquez, René Moran, Gilberto Paniura, and

Clayton Brown (the “Individuals”), alleging that the Individuals had been unlawfully terminated

from their alleged employment with the Debtor;

WHEREAS, on June 10, 2019, following an investigation into the charge filed by MRNY, the

NLRB issued an administrative complaint and notice of hearing alleging that the Debtor

discharged the Individuals in violation of the National Labor Relations Act, 29 U.S.C. § 151 et

seq.

WHEREAS, the Debtor disputes the charges but the Debtor did not respond to the NLRB’s unfair

labor practice investigation, nor did it file an answer to the NLRB’s complaint and notice of

hearing;

WHEREAS, on October 8, 2019, the NLRB issued an order granting a default judgment in favor

of the Individuals, requiring that Debtor: (a) post certain notices (the “Notification

Requirements”), (b) expunge any disciplinary actions from the Individuals’ files (the

“Expungement Requirement”), (c) reinstate the Individuals as employees (the “Reinstatement

Requirements”), and (d) make the Individuals whole for back pay through the date of

reinstatement, including interest and taxes (the “Back Pay Requirement”);

WHEREAS, on December 27, 2019, the United States Court of Appeals for the Second Circuit

entered judgment enforcing the NLRB order in full (the “Judgment”) and issued its mandate that

same date;

WHEREAS, on January 7, 2020, the NLRB issued a letter to Debtor demanding compliance with

the Judgment;


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WHEREAS, on February 13, 2020, Debtor filed a Motion to Recall Mandate;

WHEREAS, on February 20, 2020, the NLRB advised Debtor by letter that the NLRB’s Region

3 office referred the matter to the NLRB’s Contempt, Compliance, and Special Litigation Branch

(“CCSLB”) to determine whether to pursue contempt proceedings. By the same letter, CCSLB

advised Debtor that it would postpone its investigation into whether Debtor was in contempt of

the Court’s Judgment until the Second Circuit ruled on Debtor’s motion;

WHEREAS, on March 3, 2020, the Second Circuit denied Debtor’s motion to recall the mandate,

and CCSLB commenced its investigation into whether Debtor was in contempt of the Court’s

Judgment;

WHEREAS, on June 15, 2020 (the “Petition Date”), Debtor filed a voluntary petition for

protection pursuant to Chapter 11 of the Bankruptcy Code in the Southern District of New York,

together with its parent company BKD Group, LLC (“BKD”, and together with Debtor, the

“Debtors”), which cases are jointly administered and currently pending as Case No. 20-11422

before the Hon. Martin Glenn (the “Bankruptcy Case”);

WHEREAS, the Parties agree that prior to the Petition Date, Debtor satisfied both the Notification

Requirements and the Expungement Requirement, but failed to make the Individuals whole as

required by the Backpay Requirement;

WHEREAS, in April 2020, Debtor attempted to satisfy the Reinstatement Requirements by

offering employment to the Individuals. The NLRB disputes the validity of Debtor’s offers of

reinstatement, which has led to a dispute as to whether backpay continues to accrue as a post-

petition administrative obligation of the Debtor;

WHEREAS, in light of the Judgment, the Debtor scheduled each of the Individuals as creditors

of Debtor holding claims as follows, but only scheduled the NLRB as a notice party:

Juan Abarca $41,079.18 Disputed, unsecured

Clayton Brown $40,000.00 Disputed, unsecured

Nestor Marquez $51,500.00 Disputed, unsecured

René Moran $11,545 Disputed, unsecured

Gilberto Paniura $37,800 Disputed, unsecured


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WHEREAS, the NLRB has advised the Debtor that the NLRB is the proper claimant with

authority to prosecute all claims on behalf of the Individuals;

WHEREAS, the NLRB accordingly filed a proof of claim on August 24, 2020, docketed as Claim

No. 19, for backpay, interest, and taxes on behalf of the Individuals in the aggregate amount of

$285,906.08, of which, the NLRB took the position that $54,395.05 was a priority claim, and

$29,682.40 is an administrative claim;

WHEREAS, on that same date, the NLRB filed a motion for payment of administrative claim,

indicating that the administrative claim portion of its overall claim was $29,682.40, which amount

is included in Proof of Claim No. 19 [Docket No. 72];

WHEREAS, on December 11, 2020, the NLRB, alleging that backpay continues to accrue,

purported to amend its proof of claim by filing an amendment to its motion for payment of

administrative claim by increasing the administrative claim to $89,679, and thereby increasing its

overall claim to $345,902.68 [Docket No 123] (together with Docket No. 72, the “Administrative

Claim Motions”);

WHEREAS, Debtor disputes the NLRB proof of claim, as well as the Administrative Claim

Motions;

WHEREAS, the NLRB issued subpoenas post-petition allegedly pursuant to its police powers

against numerous parties, including parties whom the NLRB alleged were “Responsible Persons”

for the obligations of the Debtor, including, without limitation, Mark Rimer, as agent of the Debtor,

and Featherstone Distribution LLC (“Featherstone”), which is a limited liability company which

the Debtor submits is not an affiliate of either of the Debtors as that term is defined in the

Bankruptcy Code, but in which Mark Rimer has a 100% beneficial interest;

WHEREAS, among other things, the Debtor objected to the Subpoena of Mark Rimer as its agent

on the grounds that it violated the automatic stay, and Featherstone objected to its subpoena on the

grounds that it is not an affiliate or “responsible person” for the Debtor;

WHEREAS, the NLRB filed oppositions to the petitions to revoke that were filed by the Debtor

and Featherstone, in which it argued, in part, that the automatic stay did not apply, and that the

Type text here


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NLRB was permitted to reduce its backpay claims to liquidated judgments and to obtain

nonmonetary relief. On December 29, 2020, the Board denied the petitions revoke;

WHEREAS, on December 8, 2020, MRNY filed proofs of claim against the Debtor on behalf of

each of the Individuals as follows (collectively, the “Individual Proofs of Claim”):

Juan Carlos Abarca Claim #10011 $36,965.94 Unliquidated, unsecured

Clayton Brown Claim #10012 $35,200.00 Unliquidated, unsecured

Nestor Marquez Claim #10013 $34,751.86 Unliquidated, unsecured

René Moran Claim #10014 $34,400.00 Unliquidated, unsecured

Gilberto Paniura Claim #10015 $34,450.70 Unliquidated, unsecured

WHEREAS, Debtor disputes each of the Individual Proofs of claim and asserts that they are

duplicative of the NLRB proof of claim;

WHEREAS, the Debtors, the NLRB, and MRNY are desirous of settling the disputes among

them;

WHEREAS, in furtherance of a settlement, Debtor, NLRB, and MRNY have entered into a

Compliance Stipulation dated as of March 22, 2021 (the “Compliance Stipulation”), which

Compliance Stipulation is attached hereto as Exhibit A, and is subject to approval by the Court

presiding over the Bankruptcy Case (the “Court”);

NOW, THEREFORE, in consideration of the mutual promises made herein, and other good and

valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties

hereby agree as follows:

1. The above preamble is hereby incorporated herein by reference and is made

part of this Agreement.

2. Debtor will seek authority from the Court to execute and implement the

Compliance Stipulation, and if such approval is granted, Debtor will execute and implement the

Compliance Stipulation in accordance with its terms.


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3. In full settlement of all obligations of whatever kind or nature of Debtor

and BKD to the NLRB, MRNY, and the Individuals, the Parties agree Debtor will take the

following actions:

A. In settlement of the Backpay Requirements:

i. Claim No. 19 will be deemed allowed as a general unsecured claim in the

amount of $181,645.77.

ii. In addition, the NLRB will be deemed to have an allowed unclassified

administrative claim in the amount of $55,289.18 (the “Allowed

Administrative Claim”).

iii. Any plan filed by the Debtor will provide that the Allowed Administrative

Claim will be paid in six (6) monthly installments. The first installment will

be paid on the effective date of the Debtor’s plan of reorganization, and each

of the five (5) subsequent installments will be paid at one-month intervals

thereafter, such that the Allowed Administrative Claim will be paid in full

by that date which is five (5) months after the effective date of the Plan.

iv. No further administrative claims will accrue during the Bankruptcy Case as

a result of the Backpay Requirements.

v. The payee for the above claims, withholding requirements, tax requirements,

and allocation among the Individuals will be as set forth in the Compliance

Stipulation.

vi. Claims Nos. 10011, 10012, 10013, 10014, 10015 filed by MRNY on behalf

of each of the Individuals will be permanently expunged as duplicative of

the NLRB claims, as will the Debtors’ scheduling of such claims. The

Individuals will file no further claims in the Bankruptcy Case.

B. In full settlement of the Reinstatement Requirements:

i. Mark Rimer, a senior manager of the Debtors and an indirect shareholder

of BKD (“Rimer”) will cause Featherstone, in which he owns 100% of

the beneficial interest, to offer employment to the Individuals within

fourteen (14) days of Court approval of this Agreement. Rimer asserts that

Featherstone is in no way related to or affiliated with the Debtors, but he is

willing to cause Featherstone to make offers of employment in order to


6

avoid litigation as to whether Featherstone is a “Responsible Person”. All

of the Parties agree that no one may use the fact that Rimer has agreed to

have Featherstone offer employment to the Individuals as evidence that

Featherstone is affiliated with the Debtors.

ii. Featherstone will offer the Individuals employment as drivers at a salary

equivalent to other Featherstone starting drivers, currently between $16

and $17 per hour, provided, that the particular Individual meets the

requirements for employment as a driver previously established by

Featherstone, including, the completion of the following:

a. An employment application including name, address, Social Security

number, and employment history.

b. Executed I-9 form, including proof of employment eligibility.

c. Executed W-4 form for withholding.

d. A copy of both sides of a valid New York, New Jersey, or Connecticut

driver’s license.

e. Individual must pass a pre-employment drug test at a lab designated

by Featherstone.

f. Individual must own a smart phone and bring it to work.

g. Individual must have or obtain a Department of Transportation

medical card. If the Individual needs to take a test to obtain one,

Featherstone will pay for the test.

iii. The Parties acknowledge and agree that all driver credentials are sent to

Featherstone’s insurance company and the Department of Transportation

compliance advisor (NECS) for a driver’s license check, including DMV

extract, validity of license, and the like. If any Individual cannot be hired

as a driver either because he or she is not insurable or has significant

driving violations that make him or her unsuitable as a driver, either

Featherstone or Debtor will offer such Individual another job which may

not pay as much. Debtor will consult with the NLRB on the alternative

job offer should this be required. Featherstone is not required to offer any


7

other job, and it is Debtor’s sole responsibility to work out a suitable

alternative with the NLRB.

iv. Each of the Individuals who accept the employment offer must pass

Featherstone’s road test in a full-size cargo van or box truck. Should any

of the Individuals not be able to pass such test immediately, Featherstone

will offer training for the driver’s test. During the period that the

Individual is a trainee, such Individual will be paid as a trainee, and not

as a driver. If the Individual cannot pass the Driver’s test within three

months from the inception of his/her employment, then either

Featherstone or Debtor will offer the Individual another job which may

not pay as much. Debtor will consult with the NLRB on the alternative

job offer should this be required. Featherstone is not required to offer any

other job, and it is Debtor’s sole responsibility to work out a suitable

alternative with the NLRB.

v. Once Featherstone has offered each of the Individuals employment on the

above terms, whether or not the Individual accepts the offer of

employment, Debtor is deemed to have satisfied its Reinstatement

Requirements.

vi. The NLRB has indicated that if Featherstone needs to lay off one or more

drivers in order to make room for the Individuals, it is unlikely that the

NLRB will take action against Featherstone for doing so.

4. This Agreement and the Compliance Stipulation settle all of the remaining issues,

including the Backpay Requirements, any other amounts due, and the Reinstatement

Requirements, arising from the Judgment. Full compliance with the Compliance Stipulation and

this Agreement will resolve the NLRB investigation in this matter, including all subpoenas that

have been issued. So long as this Agreement and the Compliance Stipulation are complied with by

the Debtor, the NLRB and MRNY agree (i) to take no further discovery in this matter, and (ii) to

take no further action against any putative “Responsible Person”. The NLRB, MRNY, and the

Individuals will look only to the terms of this Agreement and the Compliance Stipulation for

satisfaction of their claims.


8

5. The Parties acknowledge and agree that the effectiveness of this Agreement and the

Compliance Stipulation is expressly conditioned upon entry of an order by the Court, in form and

substance reasonably acceptable to the Debtors, NLRB, and MRNY, approving this Agreement

and the entry by the Debtor into the Compliance Stipulation. If the Court does not approve this

Agreement and entry into the Compliance Stipulation, the Parties will continue to have all of their

rights with respect to their claims, discovery, and objections thereto as they did prior to execution

of the Compliance Stipulation.

6. So long as the Debtor’s plan of reorganization embodies the treatment of claims as

set forth in this Agreement and the Compliance Stipulation, the NLRB agrees to vote its unsecured

claim in favor of the plan.

7. Once this Agreement is approved by the Court, if the Debtor fails to comply with

any terms of this Agreement or the Compliance Stipulation, if such non-compliance is not

remedied by the Debtor within 21 days of receipt of written notice from the Regional Director of

Region 3 of the NLRB, immediately, and without the need for any further legal proceedings, the

amount of the NLRB claims in this Bankruptcy Case will be deemed allowed in the aggregate

amount of $345,902.68, minus the total of any payments previously submitted to the NLRB by the

Debtor, allocated as follows: $89,679 as an allowed administrative claim, $54,395.05 as an

allowed priority claim, and $201,828.63 as an allowed unsecured claim.

8. The Court shall have continuing jurisdiction to resolve any disputes which may

arise pursuant to this Agreement.

9. Any notices required pursuant to this agreement shall be in writing and delivered

to the following addresses, or such other address of which a Party may notify the remaining Parties

in writing:

A. If to the Debtor: Mark Rimer RM Bakery LLC 220 Coster Street Bronx, New York 10474 With a copy, not constituting service, to: Sandra E. Mayerson, Esq. David H. Hartheimer, Esq. Mayerson & Hartheimer PLLC


9

845 Third Avenue, 11th floor New York, NY 10022

B. If to the National Labor Relations Board:Kwame SamudaTrial AttorneyNational Labor Relations BoardContempt, Compliance, & Special Litigation Branch1015 Half Street, S.E., 4th FloorWashington, D.C. 20003With a copy, not constituting service, to:Caroline V. WolkoffField AttorneyNational Labor Relations Board – Region 3Leo O’Brien Federal Building11A Clinton Ave. – Room 342Albany, NY 12207-2350

C. If to MRNY and/or an Individual:Sarah LebersteinSupervising Attorney, Workplace JusticeMake the Road New York46 Waller AvenueWhite Plains, NY 10605

This Agreement cannot be amended except in a writing signed by all Parties.

IN WITNESS WHEREOF, the undersigned have set their seals as of the day and date set forth

above.

RM Bakery LLC d/b/a Leaven & Co., a wholly-owned subsidiary of BKD Group, LLC

By: BKD Group LLC, Its Managing Member

By: Kuzari Investor 27323 LLC, Its Managing Member

By: _________________________

Mark Rimer, Authorized Signatory


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Region 3 of the National Labor Relations Board

By:__________________________

Print Name:____________________________

Title:__________________________________

Make the Road New York, on behalf of itself as Charging Party, and on behalf of the Individuals

By: _____________________________

Print Name: ________________________________

Title:______________________________________

Acknowledged and agreed to by Mark Rimer in his individual capacity with respect to his

obligations pursuant to Paragraph 3.B.:

_____________________

Mark Rimer

/s/ Sarah Leberstein

Sarah Leberstein

Supervising Attorney

Regional Director, NLRB Region 3

/s/ Paul Murphy


EXHIBIT A


UNITED STATES OF AMERICA BEFORE THE NATIONAL LABOR RELATIONS BOARD

REGION 3

RM BAKERY, LLC D/B/A LEAVEN & CO., A WHOLLY-OWNED SUBSIDIARY OF BKD GROUP, LLC

and

MAKE THE ROAD NEW YORK

Case 02-CA-235116

COMPLIANCE STIPULATION

IT IS HEREBY STIPULATED AND AGREED BY AND BETWEEN RM Bakery, LLC d/b/a Leaven & Co., a wholly-owned subsidiary of BKD Group, LLC (Respondent) and Make The Road New York (Charging Party) and Region 3 of the National Labor Relations Board (Region 3), (collectively “the Parties”), that:

1. On October 8, 2019, the National Labor Relations Board (the Board), issued anOrder, reported at 368 NLRB No. 90, granting Default Judgment in the above-captioned case. The Board’s Order directed, in relevant part, that Respondent takecertain affirmative action, including making employees Juan Carlos Abarca, NestorMarquez, Rene Moran, Gilberto Paniura, and Clayton Brown, whole for any loss ofearnings as a result of their unlawful discharges on or about October 10, 2018, tocompensate them for the adverse tax consequences of receiving a lump-sum backpayaward, to offer them reinstatement, to expunge their disciplinary actions from its files,and to post a notice.

2. On December 27, 2019, the United States Court of Appeals for the Second Circuitissued a mandate in Case No. 19-3716, enforcing the Board’s Order in full.

3. Pursuant to the Board’s Order, Respondent has satisfied its Notice postingobligations, by posting the Notice to Employees on January 10, 2020.

4. Pursuant to the Board’s Order, Respondent has satisfied its expungement obligationsby notifying employees Abarca, Marquez, Moran, Paniura, and Brown in writing onFebruary 14, 2020 that it did not have any records of their respective discharges in itsemployee files and that their respective discharges would not be used against them inany way.

5. In April 2020, Respondent attempted to offer reinstatement to the employees. TheBoard disputes the validity of Respondent’s offers of reinstatement.


6. On June 15, 2020, Respondent filed a voluntary petition for Chapter 11 bankruptcy relief with the United States Bankruptcy Court for the Southern District of New York (Case No. 20-11422-mg). The bankruptcy case is pending before the Honorable Judge Martin Glenn (Bankruptcy Court).

7. On August 24, 2020, Region 3 filed a Proof of Claim (Claim No. 19) in the bankruptcy proceeding, in the total amount of $285,906.08, claiming administrative expenses of $29,682.401, wage priority claims of $54,395.05, and general unsecured claims of $201,828.63.

8. On December 11, 2020, Region 3 filed an Amended Motion for Administrative Expenses (Docket No. 123) in the bankruptcy proceeding, updating the administrative expenses claimed to $89,679.00, bringing the total amount of backpay claimed by the Board to $345,902.68.

9. In lieu of further litigation, and in full and complete resolution of all backpay and other monetary obligations arising from the court-enforced Board Order, Respondent agrees it owes a total of $236,934.95. The Parties stipulate that this amount shall settle the Board’s backpay and related monetary claims, and be resolved through the Bankruptcy Court proceeding by stipulating to two (2) allowed claims as set forth in paragraph no. 10 below.

10. The Parties stipulate further that the Board has valid claims in the Bankruptcy proceeding that total $236,934.95 and those will be assigned the following priorities:

Administrative Priority Backpay

Wage Priority Backpay General Unsecured Backpay

$55,289.18 $0 $181,645.77

The Parties agree further that the Administrative Priority Backpay amount of $55,289.18 shall be payable in six (6) monthly installments made payable to the discriminatees and sent to:

Jenny Dunn Compliance Officer NLRB Subregion 11 4035 University Parkway, Ste. 200 Winston-Salem, NC 27106.

The first installment will be paid on the effective date of a plan of reorganization, and each of the five (5) subsequent installments will be paid at one-month intervals thereafter, such that the claim will be paid in full by that date which is five (5) months

1 On August 24, 2020, Region 3 filed a Motion for Administrative Expenses (Docket No. 72) in support of the Board’s claim for administrative expenses.


after the effective date of a plan of organization. Normal withholdings shall be taken from that portion of the installments that constitutes backpay, but not from that portion that constitutes interest. The discriminatees will provide W-9 forms for the purpose of such withholding. The first installment shall be made payable to the discriminatees as follows: Name Backpay Interest Total Juan Carlos Abarca

$2,103.12 $209.26 $2,312.38

Clayton Brown

$2,049.99 $262.39 $2,312.38

Nestor Marquez

$2,094.29 $218.09 $2,312.38

Rene Moran $1,421.78 $52.46 $1,474.24 Gilberto Paniura

$740.85 $62.55 $803.40

The remaining five (5) installments shall be made payable to the discriminatees as set forth below: Name Backpay Interest Total Juan Carlos Abarca

$2,103.12 $209.28 $2,312.40

Clayton Brown $2,049.99 $262.41 $2,312.40 Nestor Marquez $2,094.29 $218.11 $2,312.40 Rene Moran $1,421.78 $52.48 $1,474.26 Gilberto Paniura $740.85 $62.57 $803.42

11. In lieu of further litigation, and in full and complete resolution of the adverse tax consequence obligations arising from the court-enforced Board Order, the parties agree that the adverse tax consequence compensation obligation of Respondent will be discharged by the following: if any general unsecured funds are distributed to the Board pursuant to its Proof of Claim, a portion of the amount, as calculated by the Board, will be remitted to the employees as excess taxes owed the employees on backpay paid as general unsecured funds. The parties agree further that within 14 calendar days of the disbursement of the final installment of administrative priority funds as a result of this Compliance Stipulation, and again after disbursement of any general unsecured funds to the Board as a result of this Compliance Stipulation, Respondent will complete and e-file at www.nlrb.gov a Report on Backpay Paid Form allocating the backpay awards set forth above to the appropriate calendar years.


12. In lieu of further litigation, and in full and complete resolution of the reinstatement obligations arising from the court-enforced Board Order, Respondent agrees that, within 14 days of the Bankruptcy Court’s approval of this Compliance Stipulation, Featherstone Distribution, LLC, a nonparty in the above-captioned action (Featherstone), will offer employees Abarca, Marquez, Moran, Paniura, and Brown employment as drivers at a salary equivalent to other Featherstone starting drivers, between $16 and $17 per hour, provided that the individual employee meets the requirement for employment as a driver, including:

a. The completion of the following:

i. An employment application including name, address, Social Security

number, and employment history.

ii. Executed I-9 form, including proof of employment eligibility.

iii. Executed W-9 form for withholding.

iv. A copy of both sides of a New York state, New Jersey, or Connecticut driver’s license.

v. Employee must pass a pre-employment drug test at a lab designated by

Featherstone.

vi. Employee must own a smartphone and bring it to work.

vii. Employee must have or obtain a Department of Transportation medical card. If the proposed employee needs to take a test to obtain one, Featherstone will pay for the test.

b. If any proposed employee cannot be hired as a driver either because they are

not insurable or have significant driving violations that make them unsuitable as a driver, either Featherstone or Respondent will offer them another job which may not pay as much. Respondent will consult with the NLRB on the alternative job offer should this be required.

c. All employees wishing to become drivers must pass Featherstone’s road test

in a full-size cargo van or box truck. Should any of the proposed employees not be able to pass such test immediately, Featherstone will offer training for the driver’s test. During the period the proposed employee is a trainee, such proposed employee will be paid as a trainee and not as a driver. If the proposed employee cannot pass the driver’s test within three months from the inception of his/her employment, then either Featherstone or Respondent will offer them another job which may not pay as much. Respondent will consult with the NLRB on the alternative job offer should this be required.


d. The Parties agree that once Featherstone has offered each of the proposed employees employment on the above terms, whether or not the proposed employee accepts the offer of employment, Respondent shall have satisfied its obligation of making valid offers of reinstatement to the employees.

e. Nothing in this paragraph twelve shall be construed as an admission that Featherstone is an affiliate of or responsible party for Respondent, and no party shall ever use this Compliance Stipulation to evidence that Featherstone is an affiliate of or responsible party for Respondent. Notwithstanding the foregoing, the Board reserves its rights to assert that Featherstone is an affiliate of or responsible party for Respondent, so long as, this Compliance Stipulation is not used as either evidence of or an admission of same.

13. This Compliance Stipulation settles the only remaining issues, including the

liquidated backpay and other amounts due, and reinstatement in the above-captioned case. Full compliance with the Compliance Stipulation will resolve the Board’s investigation in this matter, including all subpoenas that have been issued in this case.

14. This Compliance Stipulation, together with the Board’s Order described in Paragraph

1, the Court Judgment described in Paragraph 2, and any settlement agreement filed with the Bankruptcy Court embodying this Compliance Stipulation and the order of the Bankruptcy Court approving the settlement shall constitute the entire agreement of the Parties concerning backpay, reinstatement and expungement, there being no agreement of any kind, verbal or otherwise, that varies, alters, amends, or adds to it.

15. The Parties to this Compliance Stipulation acknowledge and agree that the

effectiveness of this agreement is expressly conditioned upon entry of an order by the Bankruptcy Court approving Respondent’s entry into this Compliance Stipulation.

16. Counsel for the Respondent agrees to submit this Compliance Stipulation for

approval to the Bankruptcy Court within 14 days of notification by the Regional Director that the Compliance Stipulation has been approved by the Regional Director. If the Bankruptcy Court rejects or otherwise does not approve this Compliance Stipulation, this Compliance Stipulation will no longer be binding on the Parties and will be of no legal consequence and the underlying compliance dispute will return to the Regional Director for further proceedings. If the Bankruptcy Court approves this Compliance Stipulation, the Bankruptcy Court Order will supersede the Board’s proofs of claim and provide (i) that the Board’s proofs of claim are allowed in the amount set forth herein, and (ii) that all scheduled obligations to and proofs of claim filed by the individual discriminatees are expunged as duplicative of the Board’s claims.

17. As part of the Compliance Stipulation, the Board agrees that it will not assert any

liability against any purported “responsible persons,” but will only look to the allowed claims for distribution by the Bankruptcy Court.


18. Any checks issued by the bankruptcy estate to pay the Board’s general unsecured claim should be made payable to the National Labor Relations Board and submitted to:

Jenny Dunn Compliance Officer NLRB Subregion 11 4035 University Parkway, Ste. 200 Winston-Salem, NC 27106.

The Bankruptcy estate shall include the Employer Tax Identification Number for the Respondent on the check for purposes of proportioning tax withholding, FICA contributions, and payments which will be made by the Board's Finance Branch to the Internal Revenue Service. There shall be no deductions made from interest on backpay wages or excess taxes. The Board's Finance Branch will be responsible for remitting the appropriate tax reports for Respondent's FICA contributions and for providing employees with a W-2 form.

19. Respondent agrees that in the event of noncompliance with any of the terms of the

Compliance Stipulation (the Bankruptcy Court’s failure to approve shall not constitute non-compliance), and after 21 days’ notice from the Regional Director of Region 3 of such non-compliance without remedy by the Respondent, the Regional Director will issue a Compliance Specification and Notice of Hearing in the instant case, pleading the full amount of backpay and other monetary amounts as described in the Proof of Claim and updated to the current date of issuance. Thereafter, the General Counsel may file a motion for default judgment with the Board on the allegations of the Compliance Specification. Respondent understands and agrees that the allegations of the aforementioned compliance specification will be deemed admitted and it will have waived its right to file an Answer to such Compliance Specification. The only issue that may be raised before the Board is whether the Respondent defaulted on the terms of this Compliance Stipulation. The Board may then, without necessity of trial or any other proceeding, find all allegations of the Compliance Specification to be true and make findings of fact and conclusions of law consistent with those allegations adverse to the Respondent on all issues raised by the pleadings liquidating the amount due and owing to the discriminatees as $345,902.68, minus the total of any payments submitted to the Board, representing backpay wages, interest, and excess tax liability, plus any additional backpay wages, interest and excess tax liability owing to the date of issuance. The Board may then issue an order providing a full remedy for the violations found as is appropriate to remedy such violations. The parties further agree that a U.S. Court of Appeals judgment may be entered enforcing the Board order ex parte for the outstanding liquidated total amount of $345,902.68, minus the total of any payments submitted to the Board, due and payable, together with the amount of any additional backpay, interest and excess taxes due, as accrued until the date of final payment, after service or attempted service upon Respondent at the last address provided to the General Counsel.


20. Once all obligations are met by Respondent, as required by this ComplianceStipulation, the case will be closed by Region 3.

RM Bakery, LLC d/b/a Leaven & Co., a wholly-owned subsidiary of BKD Group, LLC (Respondent)

By: _______________________________________ (Date)

Make The Road New York (Charging Party)

By: _______________________________________ (Date)

Recommended by:

________________________________________________________ Caroline V. Wolkoff, Counsel for the General Counsel (Date)

Approved by:

________________________________________________________ Paul J. Murphy, Regional Director (Date)

/s/ Caroline V. Wolkoff 3/15/21

/s/ Paul J. Murphy 3/15/21

/s/ Sarah Leberstein 3/16/2021

/s/ Sandra E. Mayerson 3/22/2021


Date post:	08-Jan-2022
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20-11422-mg Doc 160 Filed 05/20/21 Entered 05/20/21 22:12 ...

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