Former staff of Magnus to Get Some Pay

Arizona Daily Star - Dale Quinn
January 26, 2010

Workers with First Magnus Financial Corp., which shut down suddenly in August 2007 and filed for bankruptcy, have waited 2 1/2 years to receive money they earned.

More than 5,500 employees nationwide lost their jobs when the Tucson-based mortgage company closed.

First Magnus settled matters with warehouse lenders that freed up funds to distribute to employees, Morris Aaron, First Magnus’ liquidating trustee, said in an e-mail.

Aaron said the current distribution to employees was about $2.4 million, bringing the total to $2.9 million.

Aaron told the Star in September that he estimated priority wage claims at $13 million.

In a separate but related development, those who worked at First Magnus locations with more than 50 full-time employees have begun to receive payments in connection with a WARN claim filed on behalf of the workers by the New York-based law firm Outten & Golden.

The suit contended that First Magnus violated the Worker Adjustment and Retraining Notification Act, commonly known as WARN, when it terminated the jobs of employees who worked at the larger locations without giving 60 days’ notice.

As such, the WARN settlement applies only to the roughly 1,400 First Magnus employees who worked at locations with more than 50 people.

The U.S. bankruptcy court approved a settlement for those workers of $5.5 million on Dec. 17.

An initial payment of $2.6 million went out to those employees last week, said Jack A. Raisner, an attorney with Outten & Golden. The distribution of the additional $2.9 million for that settlement is dependent on further litigation, Raisner said.

A settlement in the First Magnus bankruptcy case has freed up cash, allowing former employees to get some of their unpaid wages.