Two former New England Confectionery Co. (NECCO) employees are suing previous buyer Round Hill investments for damages after the investment firm abruptly shut down the company’s Revere, Mass.-based plant July 24.
Dexter Main and Francesco D’Amelio, represented by Boston-based firm Gardner & Rosenberg, filed a class-action complaint in Massachusetts U.S. District Court July 27. They are seeking 60-days back pay and court costs from the firm, owned by the Metropoulos family.
Round Hill Investments, which has a record of scooping up floundering companies, purchased NECCO under an entity called Sweethearts Candy Co. for $17.3 million in May after a bankruptcy auction. Operations were intended to continue, with the lease on the Revere facility extended through November.
In a July 24 statement to the Boston Globe, Round Hill announced the firm had sold NECCO again to an unnamed confectionery manufacturer. It also closed NECCO’s factory, notifying employees operations had ceased and that they could collect their final checks July 27.
“Round Hill Investments was very excited to acquire NECCO’s historic brands and to be part of their national resurgence,” the company told the Boston Globe. “After careful engagement and consideration, however, the firm decided to sell the brands to another national confection manufacturer and today announced the closure of the operations in Revere, Mass.”
Earlier in July, NECCO’s bankruptcy trustee Harold B. Murphy filed a complaint alleging Round Hill had breached the original closing agreement by failing to pay $250,000 by June 30 and renouncing the remainder of its $1 million post-closing payment.
According to Murphy, Round Hill had backed out of the payments under the context that NECCO’s FDA compliance issues weren’t fully represented. In court documents, Murphy said Round Hill had been provided with a May warning letter from the FDA outlining food safety violations.
Meanwhile, Main and D’Amelio, on behalf of other NECCO employees, allege Round Hill had violated the federal Worker Adjustment and Retraining Notification Act by failing to give employees any warning of the impending shutdown.
As of Wednesday morning, Round Hill Investments had not filed a response.
Union Confectionery has been tapped by the unnamed buyer to sell off equipment and intellectual property associated with seven NECCO brands. Necco wafers, Sweethearts and Canada Mints are not for sale.