Liquidating fiduciary Pitt flirt4free
Simplexity claims to have had only “219 employees and 285 full time equivalent contractors” split between at least two separate locations – raising questions as to whether the employees or the “site” fall squarely into the Act’s definitions.Still, many bankrupt companies have been forced to pay millions in settlements with their former employees for WARN Act violations, and Simplexity may be no exception.Since adequate protections for fiduciaries are available through the bankruptcy courts, the Department does not think it appropriate to change the regulations to address this situation. Further, DOL agrees that a fiduciary whose sole function in the bankruptcy process is to liquidate a failed business for the benefit of creditors does not succeed to the notice obligations of the former employer because the fiduciary is not operating a 'business enterprise' in the normal commercial sense. It is somewhat well-settled law, at least in the circuit where the Simplexity case is pending, that WARN Act claims may be brought as an adversary proceeding.This is based on the principal that WARN Act claims are equitable in nature because they seek reimbursement of salary and benefits due to them, rather than damages resulting from their termination.In re Symplexity, LLC, et al., is pending in the United States Bankruptcy Court for the District of Delaware (Case No. The Worker Adjustment and Retraining Notification Act ("WARN Act" or the "Act"),1 29 U. In each of these cases, the pivotal issue facing the court was whether an employer that was a debtor-in-possession in a Chapter 11 case was a "liquidating fiduciary" and whether that status relieved the employer from the obligation of giving its employees 60 days' notice in accordance with the WARN Act. United Healthcare System and Jamesway are important decisions not only with respect to the outcome of WARN Act claims against debtors-in-possession, but also with respect to the possible ramification these cases may have on the timing of layoffs or plant closings by employers considering a Chapter 11 filing.
According to pleadings filed in the case, Simplexity had hoped to market and sell its assets outside of bankruptcy in order to maximize creditor recovery and preserve the jobs of its employees.However, to the extent that the buyer hires an employee of the seller, that person shall be considered an employee of the purchaser immediately after the effective date of the sale. Thus, the event of the sale and the technical "loss of employment" does not trigger notice obligations under the Act.10Moreover, the Act does not apply if the plant closing or mass layoff is a result of (1) a closing of a temporary facility or after the completion of a particular project or undertaking, and the affected employees were hired with the understanding that their employment was limited to the duration of the facility or project or undertaking, or (2) the closing or layoff constitutes a strike or constitutes a lockout not intended to evade the requirements of the Act.11 Additionally, the notification period under the Act may be reduced by (1) the faltering company exception in the WARN Act, which applies only to plant closings, (2) the unforeseen business circumstances exception, or (3) the natural disaster exception.12The failure to comply with the Act gives rise to potential civil actions by employees for damages in the form of back pay for each day of violation and benefits under any employee benefit plan which would have been covered under an employee benefit plan if the employment loss had not occurred.13 Thus, for example, if an employer terminates its employees without giving the requisite WARN notice, the employer will be liable for 60 days of back pay. Bankruptcy Implications Somewhat naturally, companies seeking bankruptcy protection are often forced to abruptly terminate employees before providing the required notice.In addition to developing the “liquidating fiduciary” principal discussed above, bankruptcy courts have examined, and often disagreed, about certain applications of the WARN Act once the “employer” is bankrupt.