Bitwise Industries and its board of directors inked an agreement to settle a pair of class action lawsuits levied by former employees.
The agreement is subject to approval in bankruptcy court.
The backstory: Shortly after tech-and-real estate startup Bitwise Industries collapsed around Memorial Day last year, several former employees filed a lawsuit against the company and former co-CEOs Jake Soberal and Irma Olguin Jr., also naming board members Mitchell Kapor, Paula Pretlow, Ollen Douglass and Joseph Proietti in the suit.
- The company faced a pair of lawsuits over the company’s collapse as it related to failure to pay wages and compliance with California layoff notice requirements.
- One class action, led by Bitwise’s Director of Operations in Buffalo, N.Y., was filed in the Fresno-based Federal District court.
- The other, comprised of almost exclusively California employees, was filed in Fresno County Superior Court, led by local attorneys Roger Bonakdar and Brian Whelan.
- Both employee suits accused Bitwise of violating the California Worker Adjustment and Retraining Notification (WARN) Act, conducting unfair business practices, and failing to properly compensate employees for all hours worked.
The big picture: According to settlement documents obtained by The Sun, Bitwise Industries and its former employees are set to agree to a $20 million settlement in the class action lawsuit.
- Five different parties will pay into the $20 million settlement fund, with around $11.5 million coming from insurance policies.
- A third-party liability policy from The Hanover Group will pay $2 million to the fund, a company policy from Scottsdale Insurance will provide around $4.5 million and a policy held by Kapor Capital Management from Great American Insurance will cover $5 million.
- Kapor has agreed to pay $5 million to satisfy one claim, and another $3.425 million will come from Kapor or Kapor-related entities.
- Motley Fool Ventures will also provide $75,000.
Employee payouts: All former employees who qualify under the settlement will be allowed to receive a maximum payout of $15,150 from the settling parties.
- The $15,150 per person payout is the maximum recovery allowed under Section 507(a)(4) of the Bankruptcy Code.
What they’re saying: Local attorneys Bonakdar and Whelan told The Sun they were grateful to deliver the maximum payout allowable under Bankruptcy law, but noted that the true loss for many of their clients was a different kind of currency: trust.
- “Bitwise would have never gotten off the ground, but for the trust and support of Fresno area community,” Bonakdar and Whelan said in a statement. “In return, Bitwise lied to Fresno and trampled hundreds of employees and their families. Through this settlement, we extracted accountability for these employees and sent a message to everyone out there: don’t mess with Fresno.”
