State says Open Gate Capital broke the law in Golden Guernsey case

WAUKESHA (WITI) -- It has been over a year since the owners of the Golden Guernsey Dairy plant in Waukesha declared bankruptcy. The state says former workers are still owed thousands of dollars, but one expert says he doubts they'll see much of it.

Golden Guernsey's former workers still get together from time to time, even though their old life routine changed suddenly.

All of these workers remember where they were on January 5th, 2013 when the former owner of Golden Guernsey Dairy in Waukesha (Open Gate Capital) declared Chapter 7 bankruptcy and locked the doors overnight.

"I got a call Saturday morning and he said "why are there locks out front?' I said 'what are you talking about?' It's life changing. I mean, a blink of an eye -- done," 25-year employee Dave Geiger said.

"I got a phone call from a co-worker the next morning that said 'hey, they shut the doors on us,'" Jennifer Helwig said.

Timothy Brooks nearly lost his home and his wife when his income disappeared.

"I wish they could feel what they did to our lives. We had one person commit suicide. I've been through depression because of it," Brooks said.

Brooks says the past year has been "hell."

13 months later, there is one thing these workers and their families are holding out hope for -- each are owed thousands in wages.

"We deserve that money," Brooks said.

"If I could have done it my way, I would have done it differently. There is major legal ramifications to doing it your way," Open Gate Capital CEO Andrew Nikou said.

Open Gate Capital is the investment firm that ran Golden Guernsey.

Nikou says shutting down overnight was not ideal, but it was legal.

"I can tell you everything that we've done to this point has been by the book," Nikou said.

The state of Wisconsin disagrees.

In November, state officials filed paperwork with a federal bankruptcy court, declaring Open Gate Capital broke the law.

Companies with 50 or more employers in Wisconsin must give workers 60 days notice before shutting down.

That gave former Golden Guernsey workers hope they would one day see their share of the more than $1.6 million the state says is owed in salary and benefits.

Bankruptcy law expert and Marquette University professor Ralph Anzivino says he does not believe the workers will see the kind of money they're hoping for.

"Unfortunately this is a liquidation, and so in Chapter 7 liquidations, the teeth of the statutes is not very strong," Anzivino said.

Federal law has its own pecking order to distribute the limited money left behind by failed companies. Federal law states secure creditors and administrative costs get paid first, like the banks and lawyers. Then, the former workers.

"I think the court will view that as a penalty, and they didn't perform that work. It's basically a penalty that was imposed by Wisconsin that they are hoping the federal courts will enforce.  I don't think they will," Anzivino said.

The state admits "when a case is in bankruptcy, provisions of bankruptcy override provisions of the Plant Closing Law."

Anzivino believes workers will get paid for unpaid vacation and similar benefits.

While the state says workers are owed in many cases tens of thousands of dollars, Anzivino says it is more likely workers will see checks on average of about $3,000.

Workers say this is unfair.

"It's just pitiful," Brooks said.

"Usually when this happens, if people receive money, it is pennies on the dollar," Helwig said.

Some workers are moving forward, while others are holding out hope a career of hard work will result in what they feel is right.

"In my heart, they see it on paper, they know they owe it to us, it's ours. Give it
to us," Geiger said.

Since the state's ruling that Open Gate Capital broke state law, the company has not returned FOX6's repeated attempts for comment.

Anzivino says under current laws, Open Gate Capital cannot be penalized beyond their Golden Guernsey portfolio.

Ultimately, a federal bankruptcy judge will decide exactly how much the former workers will receive.

There is no word on when a decision is expected.

Lifeway Foods placed the winning bid for the bankrupt Waukesha Golden Guernsey dairy plant.

Lifeway Foods was founded by Michael Smolyansky, an immigrant who arrived in the United States from Kiev, Ukraine in 1976. According to Wikipedia, 10 years after moving to the U.S., Smolyansky found the fermented milk drink kefir at a food show and decided to start producing it.

Lifeway’s flagship product is kefir. Lifeway Foods sells it in several varieties, including low-fat, non-fat, Greek, organic, and low-carb varieties, as well as these in several different flavors.