Discount real estate brokerage company Foxtons, which terminated most of its 380 employees last week, announced this week that it will file for bankruptcy and plans to hand over its active listings to another brokerage company. Also, two former employees filed a lawsuit Thursday charging that the mass layoff violated federal law.

The former employees who were part of the layoff filed a lawsuit this week charging that Foxtons did not provide sufficient notice and benefits to a group of 350 employees terminated on Sept. 26.

David A. Krenkel, a lawyer who is representing the former employees in the lawsuit, said that Foxtons has not yet been served with the complaint and should receive it next week. Foxtons officials were not immediately available for comment about the lawsuit.

Foxtons, which operated in New Jersey, New York and Connecticut, announced on Sept. 26 that it was terminating 350 of its remaining 380 employees — the company had previously employed up to 500 workers. “We understand the impact of the action we are taking, but there comes a point when you can’t stand in the way of a hurricane, and it is a property hurricane we are facing,” Foxtons Senior Vice President and General Counsel John D. Blomquist had said in a company statement.

In an Oct. 2 Web notice, the company announced its intent to file for voluntary Chapter 11 bankruptcy with the U.S. Bankruptcy Court in New Jersey and is seeking to place its property listing agreements with another brokerage company.

Mark Horvat, vice president of sales at Foxtons, stated in the Web notice, “As part of the liquidation of its assets, Foxtons is asking the bankruptcy court to authorize the assumption and assignment of your listing agreement with Foxtons to another broker. The identity of the proposed successor broker has not yet been determined.

“With the exception of the identity of the listing broker, all of the terms of your listing agreement with Foxtons would remain the same,” the notice states, and the company expects that to take place by Oct. 17. The company had about 4,400 active property listings as of Sept. 26.

Gina Longo, a Foxtons spokeswoman, said that the notice posted on the Web was also sent to all Foxtons sellers via e-mail or postal mail.

The Oct. 4 lawsuit, which seeks class-action status, alleges that Foxtons violated the federal Worker Adjustment and Retraining Act.

That act generally requires employers to provide “notice 60 days in advance of covered plant closings and covered mass layoffs” for employers with 100 or more employees, “not counting employees who have worked less than six months in the last 12 months and not counting employees who work an average of less than 20 hours a week.”

The lawsuit also charges that Foxtons is liable to pay 60 days’ worth of wages and benefits to the terminated Foxtons employees under the U.S. Employment Retirement Income Security Act.

Launched in March 2000 as YourHomeDirect, the company received a $20 million investment from London-based real estate company Foxtons, and the U.S. company changed its name to YHD Foxtons and later dropped the “YHD.” Cohen did not have a comment about the demise of the U.S. Foxtons company.

Foxtons’ unconventional discount structure had drawn protest from agents at competing companies over the years. Foxtons had offered listing services for a real estate commission that amounted to 2 percent of the home’s selling price — industry commissions more typically range from 5 to 7 percent of the selling price.

In 2004 the company altered this commission structure to a 3 percent total commission, with Foxtons getting two-thirds of the commission and sharing one-third with an agent representing the buyer in a transaction.

Several agents at competing companies had notified Foxtons that they intended to share only 1 percent of the total commission for homes they listed with Foxtons agents while offering a higher commission to agents at other companies.

The New Jersey Real Estate Commission in December 2005 notified real estate professionals that varying commission offers “that are ‘punitive or retaliatory’ in response to another broker taking listings at a lower gross commission rate than that charged by the broker offering the modified commission split” are prohibited by state code.

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