Staff are entitled to get paid ahead of creditors when a company is wound up, according to law. But the collapse of the White’s supermarket chain left nothing to pay them.

Yesterday Shadow Labour Minister Derrick Burgess — who was president of the Bermuda Industrial Union when changes to the law were made in 2000 — called the situation “most unfortunate”.

“I don’t have any issues with the companies or anybody involved in it — the issue I have is with the people not being paid,” Mr Burgess said.

“It would seem the way the business was set up, the owners lost nothing but the workers lost everything.”

The issue came to light when former employees of White & Sons Limited questioned how a new business could be built at the former premises of the Warwick supermarket, while they were never paid for benefits owed.

In the aftermath of yesterday’s story, readers contacted The Royal Gazette questioning why workers who lost their jobs had not been first in line to get paid.

The Companies Act was amended in 2000 to ensure that employees’ claims to “wages and other payments due under his contract or under this Act shall have priority over all other creditors, including the Crown” when a business is wound up.

However, that came with a caveat — covered by the Companies Act, 1981 — that the expenses incurred in winding up a company, including the payment of a liquidator, shall be payable out of the assets of the company “in priority to all other claims”.

Since the winding up of White’s did not yield sufficient funds to cover even its liquidation costs, it appears that former staff, including senior citizens, have little recourse.

While a substantial payment was made by the business owners Gary and Michael White in March 2013 to wholesalers Pitt & Co and the BGA Group of Companies, the basis of the claim against them was a personal guarantee made by the two in 2011 — and did not concern the business’s liquidation. In that case, a debt of $1.8 million was ordered to be settled after the two companies cried foul over the deal, when it emerged that the White & Sons Supermarket, Southside Supermarket and Haywards Supermarket were not a unified corporate entity.

Although the shops were wound up as a result of the mounting debts, each was a separate business — resulting in the wholesalers complaining that they had supplied goods to the three businesses under a mistaken belief that they were the same company.

Puisne Judge Stephen Hellman ruled in favour of the wholesalers.

That debt payment was, however, unconnected with the company itself, which closed shop with scant assets remaining.

Mr Burgess pointed out that changes to the Employment Act had come after the departure from Bermuda of the Club Med resort, which had left a number of local staff unpaid.

“The BIU insisted on it so that the employee would come first,” the Progressive Labour Party MP said.

When the law was amended, he hailed it a victory for workers.

But with nothing remaining to pay White’s staff, the provision of the Companies Act offers no remedy.

“I think the Labour Department should have been on top of this situation,” Mr Burgess said.

He added: “Maybe the law needs to be changed again.”