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Logan's Roadhouse workers abruptly fired with health benefits cut off

5 months 1 week 6 days ago Wednesday, April 08 2020 Apr 8, 2020 April 08, 2020 8:21 AM April 08, 2020 in News
Source: Restaurant Business

Though some food industry workers find themselves busier than ever due to the pandemic's shuttering of most businesses, workers at Logan’s Roadhouse are experiencing the exact opposite.

According to Restaurant Business, CraftWorks Holdings, which is the parent company to both Logan's Roadhouse and Old Chicago, notified its furloughed employees that were all terminated, and no longer the recipients of healthcare benefits as of March 31.

The move came after Craftworks' former CEO, Hazem Ouf, was fired for mismanagement of company funds.

Ouf allegedly passed along $7 million in sales taxes to states where the company’s various brands were in operation. 

The money was passed along “surreptitiously,” without the knowledge and prior approval of court-appointed supervising parties, according to a court filing.

Court documents also indicate that Craftworks' CFO Jim Lebs was also dismissed.

Court supervisors say they asked states to refund the taxes that were passed along, and received about $360,000 in response.

The collected taxes were forwarded after CraftWorks said it was “mothballing” all 261 of its restaurants because it lacked the funds to keep them in operation. 

At that time, virtually all of the company’s employees were furloughed, though several told Restaurant Business they were not informed at the time that their restaurants would possibly not reopen.

A number of states have deferred collection of the taxes as a way of increasing the cash flows of small businesses such as restaurants.

Casual-dining veteran Marc Buehler has stepped in as CEO and it was under his direction that health-insurance coverage for employees was terminated, leaving discharged employees without access to COBRA, the federal program that extends coverage for a short time to workers who lose their private insurance.

The employees are advised to check their state’s healthcare marketplace and shop for coverage.

While the majority of workers have been fired, some executives have apparently been retained. 

“Our small team continues to make progress consolidating the company and preparing for a day, hopefully soon, when we can return to the business of serving our communities across all our great brands,” Buehler wrote.

CraftWorks filed for Chapter 11 bankruptcy protection in early March, before the COVID-19 pandemic was viewed as a global crisis. 

It subsequently alerted the federal bankruptcy court in Delaware that it could not secure funds to keep its operations even partially open, and would have to close every store. It held open the possibility of reopening the units at a later date.

In addition to Logan’s and Old Chicago, CraftWorks’ concepts include Rock Bottom Restaurant & Brewery, Gordon Biersch Brewery Restaurant Group and ChopHouse.

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