Yellow Corp.: Del. Bankruptcy Court's WARNing to Distressed Employers

Bankruptcy attorneys Lynne Xerras and Heather Montoya co-authored an article for the American Bankruptcy Institute (ABI) Journal examining how Worker Adjustment Retraining Notification (WARN) Act exposure can complicate workforce reductions for distressed companies. The federal WARN Act generally requires covered employers to provide 60 days' advance notice of a mass layoff or plant closure, with potential liability for back pay and benefits when notice is not provided. Using the Yellow Corp. Chapter 11 decisions from the U.S. Bankruptcy Court for the District of Delaware as a roadmap, the authors highlight how outcomes can turn on timing, content of notices and availability of defenses such as the "faltering company," "unforeseeable business circumstances" and "liquidating fiduciary" exceptions.

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