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And the Third Circuit has held that a debtor ceased to be an "employer" because it was merely liquidating assets for the benefit of creditors, so it did not have any WARN liability.101
Bankruptcy Code § 1113(c) allows a debtor to reject a collective bargaining agreement under certain circumstances, and § 1113(e) allows a court to grant the debtor some interim relief from the provisions of a collective bargaining agreement. This may be essential in the early days of the chapter 11 case. The statute has no application in a chapter 7 case,102 and does not affect the amount or priority of claims in either chapter 7 or 11.103
Section 1113(e) provides that, after notice and hearing, the court may authorize the debtor to implement interim changes in the terms, conditions, wages, benefits or work rules under a collective bargaining agreement if, during a period when the collective bargaining period agreement is effective, it is essential to the continuation of the debtor's business or necessary to avoid irreparable damage to the estate.104 The debtor must show an immediate economic emergency exists and the interim relief should be limited to the bare minimal, short-term requirements necessary for the debtor's survival.105 It is not enough for the debtor to show that compliance with the collective bargaining agreement is uneconomical or burdensome. Rather, the debtor must present evidence of anticipated cost-savings, projected losses and other financial
101 In re United Healthcare System, Inc., 1999 U.S. App. LEXIS 34337 (3rd Cir. 1999).
102 Carpenters Health and Welfare Trust Funds for Cal. v. Robertson (In re Rufener Constr., Inc.), 53 F.3d 1064 (9th Cir. 1995).
103 Air Line Pilots Ass'n v. Shugrue (In re Ionosphere Clubs, Inc.), 22 F.3d 403 (2nd Cir. 1994); In re Roth American, Inc., 975 F.2d 949 (3rd Cir. 1992).
104 In re United Press Intern, Inc., 134 B.R. 507, 514 (Bankr. S.D. N.Y. 1991) (debtor is required to meet only one of the statutory standards allowing interim relief); see also In re Landmark Hotel & Casino, Inc., 76 B.R. 575, 584 (9th Cir. BAP 1987) (standards for allowing interim relief are different than those allowing full rejection).
United Press Intern, 134 B.R. at 514.
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