As you may recall, with the confirmation of the plan of liquidation in this matter last October, control of CF passed to a Trustee and an oversight committee consisting of the IBT, three union health, welfare and pension plans, and one unrelated insurance company.  The plan became effective in December 2004.

1.  Warn Act Payments.  As you all know by now, WARN Act payments were made on schedule on December 23, 2004.  As we have previously notified you on four occasions since 2002, the payments were capped at $4650 per worker, after deducting the wages employees earned prior to the bankruptcy but paid after September 3, 2002 from the priority cap.  About 96% of employees received the full WARN Act amount of $2,153.49 per person. The remaining employees (approximately 500) received less because they had exhausted all or most of their priority amount.

A small number of employees were omitted from the overall distribution.  In most cases, they were omitted because they failed to send copies of their claims to our offices as instructed.  We have now resolved all outstanding WARN Act inquiries.

To be considered eligible, an employee must (1) have filed a timely proof of claim requesting WARN Act damages; and (2) must have in fact been eligible under the statute, i.e., must not have quit, retired, been fired for cause, or been laid off or otherwise separated from the payroll for a reason unrelated to the closing. The vast majority of questions we have received from local unions and members concerned employees who were not in fact eligible. Employees who were laid off, on workers’ compensation, or on another type of leave of absence for many weeks or months before the closing, were not eligible.

The greatest single reason for the delay in this case has been the failure of the employees to submit their claims through our offices as instructed in the autumn of 2002.  We have attempted, over the last six months, to find all such persons.  CF’s agreement to add employees who never submitted their claims through our office, and thus were not included in the initial court approval in August 2004 and in the WARN Act distribution in December 2004, will put approximately 195 new names on the WARN Act list.  We now believe that all eligible persons have been added.

As consideration for the addition of these 195 names, the WARN Act list is now considered to be completely closed.  That is, no new names will be added for any reason, no matter what the circumstances are and no matter what the reason is for the employee’s failure to contact us before now.  We now have to move on in this matter to complete the settlement of the remainder of the claims in this case.  If a person has not presented evidence of their eligibility before now, they have lost all opportunity to do so.  The WARN Act list is closed.  No more employees should be referred to our offices with WARN Act questions.

The benefits portion of the payment, approximately $900 for full time and $300 for part time or casual employees, has not yet been made. The health, welfare and pension funds involved have not yet come to an agreement concerning how to divide up the benefits portion of the WARN Act money. This distribution will probably occur in 2006.

We do not have a specific date when the supplemental WARN Act checks will be sent to these 195 employees. We hope that it will be in the near future.

2.  Vacation Pay, Sick Leave and Other Items. Because we did not anticipate the large number of employees who failed to send their claims through our offices, and because we have spent the last six months responding to employee inquiries about the WARN Act, we have not made the progress on vacation pay and other claims desired. With the closing of the WARN Act list, we now will turn to this issue in greater detail.

We have learned however that CF’s records of employee vacation and other pay are in a very poor state. Over 50% of the records have been lost or destroyed and must be reconstructed. Of the remainder, a preliminary review has shown that CF simply guessed as to many employees’ amounts. Approximately 500 employees were included in the priority period that could not possibly have had priority claims (because they did not in fact work at all in the last 90 days before the bankruptcy). How to resolve this overpayment has not yet been settled. 

As a result, the CF estate will have to undertake an audit of all of these claims through an independent outside consulting firm. The expense of this effort will be considerable (and will reduce the amount employees and other creditors can recover), and the audit will take at least two additional months. It is not reasonable to expect payment on vacation and other claims to begin until, at the earliest, January 2006. This statement is not a guarantee that a distribution will occur in January or at any other time. It is a statement that there is no point to calling and requesting an update on when a distribution might occur for the next six months, because we already know that a distribution is not possible or reasonable in that time frame. 

CF listed no amounts at all for employee sick leave. This matter will also have to be settled. CF differs sharply from the IBT record concerning which grievances were settled and in what amounts. Those of you who failed to submit your grievances to our offices in a timely fashion (prior to January 21, 2003) must expect that those grievances will be denied and set at “zero” by the court. The vast majority of grievances unfortunately falls into this category. 

3.  Other Distributions.  We expect a major distribution to non-employee creditors to occur on July 1, 2005. This distribution will include the contribution and pension withdrawal liability claims of most Teamster funds, excluding the WARN Act portion of the contributions. About $20 million will be distributed at this time. 

The initial distribution will be about 4 cents per dollar. The ultimate distribution is still expected to be approximately 15 cents per dollar, but the necessity to hold reserves (for example, for the as-yet-unresolved employee claims) means that interim distributions are only a portion of the ultimate distribution. 

4.  Other Matters. The bankruptcy estate will probably remain open until 2008. There are still approximately 6 terminal properties worth $27.5 million to be sold, and at least some of these will remain outstanding for some time as buyers for these undesirable properties are sought.