In August of last year, California company Kimomex Markets Inc. filed for Chapter 7 bankruptcy, claiming $12 million in debt and less than $650,000 in assets. Two months before the bankruptcy filing, the company abruptly closed several of its business, including both San Jose locations of Mercados Su Vianda stores.

Approximately 130 Mercados Su Vianda employees were laid off when the stores were closed in June. Almost a year after their layoffs, a group of former store employees have filed a California employment lawsuit against Kimomex, alleging that the company withheld overtime pay, deducted wages for medical insurance that was never actually purchased, and denied them mandatory breaks.

The lawsuit names several companies and individuals, including Kimomex's former CEO, former members of the company's board of directors, and investment firm Pacific Community Ventures, one of Kimomex's major shareholders. The suit alleges fraud, breach of contract, and business code violations, and the plaintiffs are seeking a combined $225,000 in damages to account for unpaid wages and other costs.

Regardless of the outcome of the lawsuit, the plaintiffs may find themselves unable to recover any money from the company, which filed for Chapter 7 bankruptcy protection in August. If anything, the plaintiffs may find their lawsuit placed on hold for some time as Kimomex attempts to resolve its bankruptcy situation. The Chapter 7 filing became much more complicated in November when a federal bankruptcy judge dismissed the company's bankruptcy case. The judge stated that Kimomex "failed to comply" with a previous order to provide tax returns to the appointed bankruptcy trustee in order to work out a debt repayment plan.

Source: San Jose Business Journal, "Laid-off workers sue Kimomex", Eli Segall, 22 February 2011