Liquidating fiduciary exception to warn
In World Marketing, the recent decision from the bankruptcy court for the Northern District of Illinois, bankruptcy judge Timothy A.
The appeals court reasoned that, under those circumstances, the company was no longer operating as an ongoing business enterprise subject to the WARN Act.
§ 2101(a)(1) defines “employer” as “any business enterprise that employs ‒ (A) 100 or more employees, excluding part-time employees; or (B) 100 or more employees who in the aggregate work at least 4,000 hours per week (exclusive of hours of overtime).” However, a court-fashioned “liquidating fiduciary” exception provides that a liquidating fiduciary in a bankruptcy case (e.g., a trustee or other estate representative) does not fit the definition of an employer for purposes of WARN. of Unsecured Creditors of United Healthcare Sys., Inc.
(In re United Healthcare Sys., Inc.), 200 F.3d 170 (3d Cir. Dewey & Le Boeuf LLP (In re Dewey & Le Boeuf LLP), 2013 BL 39061 (Bankr.
Cambridge Credit Counseling Corp., 409 F.3d 473, 476 (1st Cir.
Despite the increasing prominence of pre-packaged or pre-negotiated chapter 11 cases in recent years, not every bankruptcy filing by or against a company is a carefully planned event orchestrated over a period of months or even years to achieve a workable reorganization, sale, or liquidation strategy.
Sometimes, unanticipated circumstances precipitate a bankruptcy filing.
Generally, deciding whether the exception applies in any given case depends on (1) when the employer in question filed for bankruptcy; and (2) when the Act required them to provide lay-off notice in the first place.
This rule, however, has been only rarely applied and, as such, is wholly undeveloped.