Richards Layton & Finger
 

"Don't Say They Didn't WARN You": Bankruptcy Court's High Threshold for Corporate Affiliates' WARN Act Liability

June 1, 2011

In two recent decisions, the Delaware Bankruptcy Court rejected the imposition of WARN Act liability on corporations affiliated with debtors. The court determined that, notwithstanding common ownership and (in one case) common directors or officers, the plaintiff-employees failed to introduce sufficient facts to support a finding of de facto control. Absent such evidence, the Delaware Bankruptcy Court held that the affiliate corporations cannot be held liable for alleged WARN Act violations of the debtor-employer.