Contract Staffing Talking Takeover, Attorney Says

Contract Staffing of America, which filed for protection from its creditors under Chapter 11 of the U.S Bankruptcy Code in September, closed its doors last week and is negotiating a possible takeover by another firm, the company’s lawyer said.

When it ceased operations, Tustin-based Contract Staffing had 415 employees placed with various employers--down from 1,500 at its peak. Founded in 1974, CSA provided “leased” employees to client companies, charging a fee for its services and retaining tax and insurance liability for the workers.

Currently, an answering service fields calls for the company, explaining that CSA has “ceased operations.” But the firm’s Los Angeles-based attorney, Ira Kharasch, said the company would make an announcement “in a couple days” regarding an “entity talking about taking it over.”

Kharasch declined to say what has happened to the 415 people who were working in CSA-arranged jobs when the company shut down.

He confirmed that the CSA’s biggest creditor was the U.S. Internal Revenue Service, which claims $6.3 million in back payroll taxes, according to the Chapter 11 filing. The company was forced to close its doors because it lacked sufficient operating funds, Kharasch said.