Sunday, December 14, 2008

Oh, Please! Owner of Republic Windows and Doors Plays Victim Card, Denies "Union Dumping"

Richard Gellman (previous reports listed his last name as "Gillman"), the owner of Republic Windows and Doors has come forward to blame Bank of America (again) for the company's demise. Gellman alleges that earlier this year Bank of America decided to "liquidate" the company even though he had lined up investors to finance a cash purchase of an Ohio company. This purchase, according to Gellman, would have allowed Republic Windows and Doors to earn a $3.5 million profit.

Of course, Gellman's latest "victim impact statement" does not disclose the terms of this alleged cash infusion and how it would have affected the company's ability to service its debt with Bank of America. Instead, he just blames the bank for the company's failure. But if the company was already having trouble paying Bank of America, the bank probably had legitimate concerns with the introduction of new creditors and a potentially risky investment. A reasonable creditor could consider an investment on the higher side of risk if it were the sole plan the debtor offered to generate a profit and pay its bills. Divorced from preexisting emotions concerning bailouts and banks, the emerging facts still indicate that the company was on the skids and that Bank of America made a rational banking decision.

Gellman also provides new dirt for analysis: The employees in the Iowa company are not unionized. Basically, Gellman has discarded his unionized workforce in Chicago, quietly opened a new company in Iowa that conducts the same business, used big Chicago politicos to shame Bank of America into paying Republic's labor obligations, and will now run a cheaper business with a nonunionized workforce. Progressives, however, continue to center their analysis and criticism on Bank of America.

Gellman denies being a union-dumper, however, and he says that the union issue did not influence his decision to move to Iowa. Gellman, on the other hand, does confirm an argument I have made in previous blog entries. He says that the relatively cheaper cost of operating the business in Iowa versus Chicago indeed impacted the decision to relocate. So the drama continues. Personally, I find Gellman about as credible a figure as Blagojevich.

Source: Chicago Sun-Times

Related Readings on Dissenting Justice:

* MADE IN IOWA: Did Company in Chicago Sit-In Illegally Discard Its Workers and Quietly Relocate While Liberals Forced BOA to Pay for the Shady Scheme?

* Republic Windows and Doors Received a Bailout from Chicago Before It Bailed Out of Chicago

* Laid-Off Republic Windows and Doors Workers: Pawns in Political Football

* Factory Closes in Chicago; Workers Invoke Bailout During Protest

* What (I Think) Progressives Should Have Done for Workers of Republic Windows and Doors


Critical Thinker said...

Good analysis in both of your posts concerning the situation with Republic. There is one thing that I have not found though, it concerns the companies culpability. As I understand, via Jesse Jackson's talk show this weekend, Republic only gave its employees 3 days notice they were closing their doors.

As I understand the law, in most states, requires anywhere from 30-90 days notice to employees that a company will going out of business. Obviously there are extenuating circumstances where this will not be possible. However, Republic was well aware of their financial troubles and chose not to alert their workers.

I am by no means an advocate for unions, in fact I despise them, and I am a self professed free-marketer. But, what Republic did to their staff was just wrong and quite illegal.

As you pointed out, directing anger towards BOA and then letting Republic walk away Scott free is simply short-sighted and does nothing to solve the problem.

Darren Lenard Hutchinson said...

Read this one:

Basically, the laws require notice. There are some exceptions for extreme circumstances. But basically, all of the liability rests with the company. The protests managed to shift liability to Bank of America by either failing to distinguish the employer from the bank under the WARN Act or by imputing liability to the bank due to its participation in the bailout.

Anonymous said...

Well, wait a second. I agree that the company has the ultimate responsibility to honor its obligations to its employees. And from what we know so far, it's clear Republic acted cynically to try and get away with something (or several somethings).

However, BofA cut off the line of credit and told Republic to shut down right away. Unless you're trying to argue that BofA executives are not familiar with business law, BofA also acted cynically by knowingly telling Republic to commit what they (BofA) knew was a WARN act violation.

If it's common for a huge banking firm to be in the business of demanding their customers break the law, that in itself warrants closer scrutiny.

To the extent that BofA did this, reopening the line of credit and enabling Republic to settle its labor obligations was as much, or more, about self-interest as public pressure.


Darren Lenard Hutchinson said...

Bank of American cannot MAKE a company shut down. It can refuse to issue additional credit, but if the company can secure financing elsewhere, it can remain in business. Banks do not force people out of business. Lack of credit does.

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