In an August 2017 decision, the Third Circuit ruled that an employer’s obligation to provide its employees with pre-termination notice under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq. (the “WARN Act”), is not triggered by “unforeseeable” events but instead springs into effect at the time that terminations become “probable.” Varela v. AE Liquidation, 866 F.3d 515 (3d Cir. 2017). Since the Third Circuit’s ruling, Varela’s foreseeability standard has been a popular topic in bankruptcy forums, but foreseeability issues are just the tip of the iceberg when it comes to the interplay between bankruptcy proceedings and the WARN Act. This article addresses the various ways in which bankruptcy and the WARN Act intersect in the Third Circuit and provides advice on how debtors’ counsel can minimize the impact the WARN Act has on their clients’ Chapter 11 restructuring efforts.
