Liquidating fiduciary exception to warn
Private-equity fund Cerberus Capital Management Corp. At the time, Flexible Flyer manufactured swing sets, hobby horses, go-carts, utility vehicles, and fitness equipment, in addition to the iconic Flexible Flyer sled, sold by a variety of retailers, including Walmart, Toys "R" Us, Kmart, and Sam's Club.
The Fifth Circuit addressed the unforeseeable-business-circumstances exception to the federal WARN notification requirement in Flexible Flyer. Flexible-Flyer ("Flexible Flyer") in 1997 to purchase the Flexible Flyer assets out of bankruptcy.
A group of more than 100 former employees filed an adversary proceeding in the bankruptcy court alleging that Flexible Flyer was liable under WARN for failing to give them the required 60-day layoff notice.
Shortly afterward, Flexible Flyer sold substantially all of its assets, including the Flexible Flyer trademark.
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.
the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees. However, the issue was apparently never raised in either the bankruptcy or appellate courts. The debtor in Flexible Flyer may also have been exempt from the 60-day WARN notification requirement as a liquidating fiduciary, especially given that the company never attempted to reorganize in chapter 11 instead of shutting down immediately upon the bankruptcy filing. 2102(a) provides that: [a]n employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order ‒ (1) to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee. 2101(a)(3) as a reduction in the workforce that is not the result of a plant closing and results in an employment loss at a single site of employment during any 30-day period of a specified percentage or aggregate number of employees.