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agreement and a bank's attempt to increase or establish a reserve postpetition may run afoul of the provisions of § 365(e)(1) or be rejected as an improper request for adequate protection under § 363.93 And its charging prepetition claims against proceeds of postpetition sales probably not only violates the stay but is not protected as a setoff due to lack of mutuality.94
Debtors, and particularly debtor's counsel, who may face the need to close a portion of the business and layoff workers need to be aware of the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. §§ 2101 through 2109. Additionally, some states have enacted similar laws designed to protect employees from unannounced plant closings and layoffs. No attempt is made here to be precise with respect to the many definitions contained in the act and the Department of Labor rules interpreting it, but merely very generally to alert counsel to its existence and potential applicability.
WARN requires employers95 to give sixty-days advance notice of shutdowns affecting at least fifty workers and of layoffs that would last more than six months and affect one-third of the workers at the site. The Department of Labor rules interpreting WARN indicate the notification requirements are triggered when a plant closing results in the termination of fifty or more workers, including managerial and supervisory employees, at a single site, a layoff exceeding six
93 In re Thomas B. Hamilton Co., Inc., 969 F.2d at 1013 (court refused to allow bank to establish reserve because although agreement allowed for a reserve, bank never required one prepetition). Section 365(e)(1) (executory contract may not be "terminated or modified" postpetition solely because of a contract provision conditioned on insolvency or financial condition of debtor or commencement of bankruptcy).
94 In re Calstar, Inc., 159 B.R. 247 (Bankr. D. Minn. 1993).
Employers are defined as business enterprises that employ 100 or more employees, excluding part-time employees, or 100 or more employees who in the aggregate work at least 4,000 hour per week, excluding overtime.
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