The desolate reception area on the second floor.

NEW YORK — It was an emotional morning Friday, as the terminated employees of LF Brands drifted into 1412 Broadway here, packed up boxes and shopping bags with their Rolodexes, photographs, fabric swatches and Pantene color books, and hugged and...

NEW YORK — It was an emotional morning Friday, as the terminated employees of LF Brands drifted into 1412 Broadway here, packed up boxes and shopping bags with their Rolodexes, photographs, fabric swatches and Pantene color books, and hugged and said goodbye to their former colleagues.

Some of the employees appeared resigned to their situation, others were angry, but most remained mystified as to why the company was forced to close so abruptly Christmas week, and why they weren’t given any notice or benefits.

“They put us out in the cold,” said Guy Noto, who had been with the company 34 years in technology and computers. “It was a family. We were all in this together. The part we’re hurt about is how they treated us. We have no idea what caused it. It’s really like a mystery.”

John J. Pomerantz, former chairman of LF Brands who still owns about 6 percent of the company, was on hand talking with the employees and clearing out his own office. Meanwhile, the new man in charge, J. Richard Budd III of the financial consulting firm Marotta Gund Budd & Dzera LLC here, who was retained as the chief restructuring officer last week, spoke to WWD about the company’s plans. Budd succeeded Marvin Davis of Grisanti, Galeff & Goldress of Atlanta, who left right after the new year after several weeks on the job.

“Everybody, all the parties, are working to try and come up with something,” said Budd, who added that he hopes to announce a plan this week. He said he didn’t know when a filing would occur and it hasn’t been decided yet if it would be a Chapter 11 or a Chapter 7 liquidation.

“We’re still looking at the possibilities and options to maximize the brand. As far as the timing and the court interaction, we haven’t laid out a definitive plan yet. The first goal is to arrange some kind of interim financing,” said Budd. In conjunction with that, he said, LF Brands needs to deal with paying back wages to its terminated employees, both in New York and at its former plant in Laflin, Pa. “We’re trying to get some stabilization for the balance of the project.”

This story first appeared in the January 12, 2004 issue of WWD. Subscribe Today.

Asked whether employees would get their back wages soon, he replied, “I think to the extent it can be rectified would be a good thing. It doesn’t have to be after a filing. Cash is nice.”

He said some people may be called back, but obviously they’re all free to find new jobs because they are no longer employed by LF Brands. “It’s a highly unusual situation to have no employees,” said Budd, noting that was the predicament he found the company in when he began the job last week. Budd said he hasn’t seen the list of creditors, and that it was “way too early” to comment on severance pay and COBRA. Usually, he said, most companies would wind down to get to zero, and not just get to zero immediately.

Sources said they were surprised that LF Brands shut down so abruptly, since there was so much spring merchandise in the distribution center all ready to be shipped to stores. Li & Fung, which is LF Brands’ largest creditor, currently owns all the merchandise. Budd said Li & Fung has been supportive.

“We’ll be in touch with all the customers and all the suppliers,” added Budd.

As the former employees signed in Friday, they were greeted by Suzanne Tully, LF’s former vice president of human resources, who gave them a memo with a benefits update. It said that LF Brands was no longer funding their health insurance and recommended that employees arrange for an individual plan with an insurance carrier, either one of LF Brands’ carriers or their own. If they elect an LF Brands’ carrier, any claims they incurred between Jan. 1 and now would be covered if they convert to an individual plan. Otherwise, they will be responsible for paying any doctors’ fees in full. The memo also noted that the firm was trying to get them back wages and had initiated the process of making their funds in their 401(K) plans available to them. One employee asked if they would be getting COBRA and Tully said “no.” None of the employees contacted appeared happy that they would have to sign up for their own health insurance, and as as one put it, “It’s going to cost everybody a fortune.”

The former staffers — many of whom are still seething over the way the company’s closure was handled — were unable to get into their computers Friday to retrieve their files, and several employees, who have been hired by Silver Lake, an LF Brands’ licensee, were taking out fabric samples and Pantene color cards.

Sabrina Yeung, former production manager, who has been with the company 16 years, said, “It’s the worst ever. They’ve been through bad times, but this is the pits. To be called at home Christmas weekend and told ‘Don’t come to work, the company is going to be closed,’ after you’ve been here 16 years.”

As for finding new employment, Noto said the human resources department “has been very helpful in giving us [employment] agencies to go to.” Yeung agreed, noting that Tully “has been quite remarkable. She’s trying her best.”

One employee walking out with shopping bags was completely enraged.

“I just want to say how horrible Li & Fung was. I want everyone to know how horrible this was. This company was run by morons for two years,” said the employee, who declined to identify herself.

For more than two weeks after learning the company had closed, employees were unable to get back into their offices to retrieve their belongings. By the appearance of LF Brands’ showroom Friday, it looked as though time had stood still. The second floor receptionist’s desk was covered with old mail, a dead plant and a menorah. The showrooms were still filled with Leslie Fay’s transitional line hanging on display, and a Dec. 31 copy of WWD lay in the third floor hallway outside the elevator. A large manila envelope sat on one of the desks, addressed to John J. Pomerantz at LF Brands, with the word “Closed” written on it.