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Lynn Tilton once owned 74 companies. Well, “owned” is perhaps too strong a word. She controlled them through a bewildering web of shell companies, insulated from them by her private equity firm Patriarch Partners and a series of collateralized loan obligations. Also, there are a good deal fewer than 74 now. One of the former 74 is TransCare, a Brooklyn ambulance company no longer controlled by Tilton because it no longer exists. But even though TransCare was owned by one of those CLOs, and even though Tilton had placed that CLO into bankruptcy and had Patriarch step down as collateral manager of said CLO before TransCare itself went into bankruptcy, and even though she was vindicated for all of the above and more by SEC, Tilton is still personally responsible for paying all of those ambulance drivers and EMTs laid off by TransCare at a moment’s notice because she wouldn’t promise to pay them to not abandon their drug-laden vehicles.

Judge Bernstein found that she was, in economic reality, the person who made critical decisions for TransCare and who was responsible for the ambulance company workers’ wages under state law…. In addition to state-law claims for unpaid wages, which could add up to about $1.7 million, former TransCare employees are pursuing damages under laws requiring advance notice of mass layoffs.

Ms. Tilton isn’t exposed to liability for the WARN Act claims, but the management company she runs, Patriarch Partners LLC, will face trial, the judge said. Patriarch has denied being liable for the ambulance workers, contending that TransCare was their employer.

Apparently, “you pay me first, payroll second, and then I don’t care who else you pay” is not an enforceable principle under New York State law.

Lynn Tilton Held Responsible for Unpaid Wages at Failed Ambulance Company [WSJ]


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