Third Circuit Rules That WARN Act's "Unforeseeable Business Circumstances" Exception Requires That Layoffs Be Probable, Not Possible

In Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), 866 F.3d 515 (3d Cir. 2017), the U.S. Court of Appeals for the Third Circuit became the sixth circuit court of appeals to rule that a "probability standard" applies in determining whether an employer is relieved from giving 60 days' advance notice to employees of a mass layoff under the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act"). The court upheld lower court rulings that a chapter 11 debtor-employer could rely on the WARN Act's "unforeseeable business circumstances" exception because a proposed sale of the company as a going concern under section 363(b) of the Bankruptcy Code collapsed due to the failure of a Russian bank to honor its commitment to provide the buyer with acquisition financing.