Former employees of two Latino markets in San-Jose by the name of Mercados Su Vianda have filed suit against the company after a failed bankruptcy filing revealed that the company had been acting as acting properly.
The 50 former workers of the company are, according to sources owed at least $75,000 in unpaid wages and $150,000 in penalties for the company's failure to follow through on its corporate obligations.
The suit was filed in Santa Clara County Superior Court and seeks over $200,000 in unpaid wages and penalties. The former employees allege that the corporate owner of the markets, Kimomex Markets, submitted a sham bankruptcy filing that was designed to fool both its employees and the City of San Jose.
The bankruptcy petition denied after it was found that the company could not "establish its existence as a corporation." Apparently the company was organized as a limited liability company and then later on as a corporation, but had never complied with the required corporate formalities. Among the business' failings were its failure to maintain books and records, failure to ensure adequate capitalization, and its lack of regular meetings of officers and directors. Basically, the plaintiffs allege the corporation failed to act as a "properly constituted LLC or corporation."
The employees also allege that the company denied them the required rest periods, meal breaks and overtime pay, and that it deducted money from their earnings for health insurance never purchased.
The plaintiffs allege that Kimomex had a corporate "alter ego" company in San Francisco by the name of Pacific Community Ventures, which partnered with the City of San Jose to match its investment contributions ten to one. City officials were unaware of the company's unlawful activity when it invested $504,000 in 2007 by means of an economic development catalyst program in exchange for preferred stock.
The City of Jan Jose has not yet pursued at legal remedy against the company, and rather views the loss as it would any other loss on an investment. One spokesman, however, did say that the City would be looking into whether there was any "wrongdoing" on the company's part.
Source: www.mercurynews.com, "Former workers sue Su Vianda," John Woolfolk, 22 Feb 2011.