Fairmont Southampton employees may sue Gencom
Lawyers for jobless Fairmont Southampton employees will sue hotel owner Gencom if the firm does not make good on redundancy payments, the finance minister said yesterday.
Hundreds of ex-staff had to agree to the class action against the company as part of their deal to get bailed out by the Bermuda Government when Gencom failed to pay them, according to Curtis Dickinson.
Mr Dickinson said in a press conference that lawyers hired by the employees would be writing to Gencom shortly.
Mr Dickinson said the Government was prepared to go ahead with a promised redevelopment of the site “without Gencom if necessary”.
The Miami-based company, which bought the Fairmont Southampton in December 2019, shuttered the premises in October after the Covid-19 pandemic scuppered most of this year’s tourism.
Gencom said there would be an intensive 18-month makeover of the hotel, which was scheduled to reopen in 2022. (See timeline here)
The company was left with substantial redundancy payments for nearly 700 staff, about 500 of whom were Bermudian.
Mr Dickinson said $9.7 million had been paid to 552 employees so far. In all, $11 million in redundancy payments are owed to 671 former employees.
He added: “The timing of any further advances is completely subject to any remaining employees submitting properly signed documentation.”
Mr Dickinson said that if Gencom failed to make the payments or if there was no response to their counsel’s letters seeking payment for the former staff, the lawyers would sue in the Bermuda Supreme Court.
Mr Dickinson said the employees agreed to form a class when they signed their loan agreements with the Government. This means they can bring a class-action lawsuit against the company rather than hiring their own individual lawyers and bringing their own actions.
Mr Dickinson said the Government took advice from “leading UK and Bermuda counsel on the impact of the Employment Act” before making the payments.
“The agreements entered into by each employee prior to their payment are likewise designed with the statute in mind.”
Mr Dickinson said the Government had made its move after Gencom’s November 20 deadline for the payments expired, and after a week of no communications from the company on a payment plan.
He said lawyers for former staff would issue a “statutory demand” on the site’s owner, Westend Properties, owned in turn by Gencom, for the payments to be made.
If no payment arrangement is in place with the firm, lawyers can apply to the Supreme Court.
Mr Dickinson also said Government was prepared to work with other investors to start the hotel renovation project if Gencom was unable to raise sufficient capital.
Mr Dickinson said: “As we have demonstrated previously, the Bermuda Government is willing to use the full extent of the law to protect the interests of the people of Bermuda.”
He said the Government was looking to get the renovation of the “iconic” hotel back on track, and said the Government had examined “the potential to partner with other equity and debt investors, including Bermudian investors and lenders”.
Renovations promised for the Fairmount Southampton might have to be scaled down, but Mr Dickinson said it was difficult to assess without “examining Gencom’s books, which I have not”.
He said further plans had not been finalised, but that the uncertainty over the project would not be put on former employees who were “worst placed to bear it”.
He added: “We are committed to see this project through and are prepared to do so without Gencom if necessary, if they cannot stand behind the obligations they have.”
Gencom is still attempting to raise capital for the project, but Mr Dickinson said the hospitality giant had been hit hard by the global pandemic.
As a result, the company “has had difficulty raising financing”.
Mr Dickinson had he believed there would be “a group of investors who would be supportive of the opportunity to take that asset and move it forward” – but he said there had been no firm discussions.