Employees at Appleton paper company APPVION are learning about the fallout from the company’s bankruptcy filing. Earlier this month, APPVION agreed to a deal with a group of lenders to purchase its assets after it filed for Chapter 11 bankruptcy protection last year. The moves doesn’t just mean people will lose their jobs, some are also losing part of their retirement funds.
In a successful effort to save what is now APPVION, those who worked for the paper company back in 2001 invested in an Employee Stock Ownership Plan to the tune of more than a hundred million dollars. “It was terrifically brave on their part to do that, and for quite a few years they were awarded for that. The company stayed in business, people were still employed, they were good members and stewards of the community, which they are to this day,” says Mark Scheffler, CEO of Appleton Group.
Over the years the value of the ESOP has risen and fallen, until invested employees learned earlier this month it is now worth nothing. According to Scheffler, “In this particular case, it really appears that a lot of the financial benefit went to the debt holders, to others who were able to cash out of the plan ahead of everyone else.” And for those who couldn’t cash out, a large portion of their nest egg is gone.
Outagamie County Executive Tom Nelson says, “For some of these workers you’re talking $30,000, $50,000, $80,000 that is never going to return.” While Mark Scheffler says this situation is a good lesson in why people need to diversify their retirement accounts, Nelson says constituents are reaching out to him for help. Nelson adds, “Ultimately it’s a decision that’s going to come down to the workers, to the company but you’re talking $30 million, so I think I owe it to them to at least do some work and some research and see if there are any options.”
An APPVION official tells us while the company notified the ESOP investors the plan is most likely worth nothing under the proposed sale, no final determination has been made yet and won’t be decided until the sale is final.