Abstract
Yellow Corporation, the 99-year-old trucking giant, filed for bankruptcy on August 6, 2023. A week before filing, the company abruptly shut down its operations and laid off its entire workforce of thirty thousand employees. Under the Warn Act, employers like Yellow are required to notify their employees 60 days before conducting any mass layoffs or plant closings. Yellow, however, claimed that it did not need to give any advanced notice to its employees because it qualified for an obscure exception to the Warn Act known as the liquidating fiduciary exception.
Under the sliding scale test established in In re United Healthcare Systems, Yellow presents a strong case that it was a liquidating fiduciary. However, Yellow made the mistake of laying off its workforce before filing for bankruptcy; in other words, Yellow chose to fire-then-file. Although businesses that file-then-fire cannot be liquidating fiduciaries, the court in In re United Healthcare Systems fell short of explicitly laying out this requirement. Applying the liquidating fiduciary exception to Yellow or any business that chooses to fire-then-file would be a mistake and would permit exactly the kind of abrupt mass layoffs that Congress sought to deter when it passed the Warn Act. This Comment suggests that future courts analyzing the exception explicitly lay out a file-then-fire requirement. Similarly, businesses faced with the possibility of bankruptcy and liquidation should be on notice that the liquidating fiduciary exception is not available to businesses that choose to fire-then-file.
Recommended Citation
Jeremiah A. Carew III,
Liquidating Fiduciary Warning: Do Not Follow the Yellow (Corp.) Brick Road,
41
Emory Bankr. Dev. J.
61
(2024).
Available at:
https://scholarlycommons.law.emory.edu/ebdj/vol41/iss1/2