Falcon Files WARN Notices, Fails to Raise New Capital

YOUNGSTOWN, Ohio – Falcon Transport Co. said Tuesday it failed to give proper written 60-day notice as required under the Worker Adjustment Retraining Notification, or WARN, Act of closing three operations in northeastern Ohio because of “unforeseen business circumstances relating to material impairment of operations” and other factors.

Falcon abruptly shut its doors on April 27 and terminated more than 500 employees without filing a WARN notice, which is required by federal law for companies that employ more than 100 people.

Instead, Falcon filed three separate WARN letters Tuesday afternoon with the Ohio Department of Job & Family Services dated April 27 providing notice of facility closures on Belmont Avenue in Liberty Township, Victoria Road in Austintown and Baumbart Road in Lorain. The company also operates facilities in Nashville and LaVergne, Tenn.; Kansas City, Kansas; Weirton, W. Va.; and Romulus and Lake Orion, Mich.

“Falcon has currently ceased operations as a going concern and is solely engaged in attempting to liquidate its assets,” the WARN letters say. 

The company’s Ohio operations employed a total of 162 people – 52 drivers in Austintown, 61 employees in Lorain and 49 workers at the trucking company’s headquarters in Liberty, according to the notice.

“The elimination of these positions will be permanent, and there are no bumping rights,” the letters say.

Falcon said the the WARN notice was not issued earlier because of “unforeseen business circumstances relating to the material impairment of operations and the inability to realize on outstanding receivables, including, without limitation, issues associated with Falcon’s largest customer closing several operations.”

The company pointed to other factors including new work that never materialized, the failure of Falcon to raise new capital, lending sources and vendors that refused to advance funds, unsuccessful attempts to sell excess equipment and unsuccessful attempts to negotiate a settlement payment with its largest customer.

“Sending notices earlier would have jeopardized our effort to obtain further funding,” the letters state.

Los Angeles private equity firm, CounterPoint Capital Partners LLC, acquired Falcon Transport from the Constantini family in September 2017. 

A class action lawsuit filed April 29 in U.S. District Court in Youngstown alleges Falcon used its employee message system to terminate its local employees and more than 400 others across the country without first issuing a WARN letter 60 days in advance as required by law.

“The defendant failed to pay and each of the class members their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 working days following their respective terminations,” the pleadings state. 

Copyright 2024 The Business Journal, Youngstown, Ohio.