KIAMESHA LAKE — Employees of financially crippled Leisure Time Spring Water Co. say the company took money out of their paychecks for weeks for medical insurance, but never paid their insurance provider.
The company's owner, meanwhile, has filed for personal bankruptcy protection to avoid being held responsible for the company's debts.
The longtime Kiamesha Lake business' parent company, A.T. Reynolds & Sons, filed for Chapter 11 bankruptcy Dec. 5.
Leisure Time has continued to take money out of employees' paychecks for medical insurance. Last week, employees, who now number about 50, were told that the company's owner never paid the insurer.
"He wasn't paying it for weeks, so Aetna dropped us," said one driver. The employee, who didn't want to give his name, provided the Times Herald-Record with a pay stub that indicated his paycheck has been docked more than $500 for insurance this year.
Another longtime driver confirmed employees' paychecks were docked money for the insurance.
In court papers, Wells Fargo, which is trying to convert the case to a Chapter 7 liquidation, claimed the company owes a total of $43,354 in life and medical insurance. It also owes for workers' compensation insurance and other fees.
The lawyer for A.T. Reynolds didn't return calls.
State Labor Department spokeswoman Karen Williamson said such an action would violate state law.
"It would be considered an illegal deduction from an employee," she said.
But it appears the employees will be stiffed. Williamson said the Labor Department can't launch an investigation, and the employees' only recourse is to file claims with Bankruptcy Court.
Earlier this week, Harold Bruce Reynolds, the owner of A.T. Reynolds, filed for personal Chapter 11 bankruptcy in a bid to protect his home and property. Reynolds had personally guaranteed more than $3 million of his business' debts.
He listed more than $3.5 million in liabilities and $775,985 in assets, including more than $200,000 in investments with Barriger & Barriger, a Monticello brokerage run by the troubled financier Lloyd Barriger and his sister.
The court has ordered an auction of A.T. Reynolds on March 27, where a buyer could emerge.
"At the auction, it is expected there will be eight companies bidding for Leisure Time," said Lawrence Klein, Reynolds' personal attorney. "Management thinks this should definitely save the company and preserve the jobs of the employees."
Klein referred questions about the medical insurance issue to the corporate attorneys.
vwhitman@th-record.com
Reporter Michael Levensohn contributed to this story.
