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but may not be used to reduce employees' WARN rights.
As would be expected, if the date of the required notice is postpetition, the damages under WARN may be entitled to administrative priority. But where the employees were terminated propitiation there may be an argument that they are entitled to administrative priority for the portion of the 60 days that fell postpetition. One recent case rejected that argument, concluding that the back pay award is more in the nature of severance pay that is earned on the date of termination.
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.
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, and does not affect the amount or priority of claims in either chapter 7 or 11.
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
