Whether a claimant is entitled to an administrative expense claim, or simply a prepetition claim, can mean the difference between full payment of the claim and the recovery of only pennies on the dollar. Accordingly, a significant amount of litigation in bankruptcy cases centers around the priority status to which certain claims are entitled. The U.S. Bankruptcy Court for the Northern District of Illinois has recently issued a decision granting priority status to claimants seeking damages for violation of the Worker Adjustment and Retraining Notification Act (the WARN Act). Given the significant liability that debtors could face under the WARN Act, this decision is relevant to all bankruptcy practitioners.
On Feb. 24, in In re World Marketing Chicago, 564 B.R. 587 (Bankr. N.D. Ill. 2017), the U.S. Bankruptcy Court for the Northern District of Illinois addressed an application for allowance of a class of administrative expense claims against three debtors under the WARN Act. The WARN Act claimants were all employees of the debtors who were terminated from their employment on the date on which the debtors filed for protection under the Bankruptcy Code. The WARN Act claimants asserted that their claims for damages under the WARN Act were entitled to administrative priority in the bankruptcy cases, but the liquidating trustee acting on behalf of the estates argued in the alternative that either there was no liability under the WARN Act or, to the extent there was such liability, the claims were not entitled to administrative priority.
Facts and Arguments of the Parties
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
