A recent Delaware court ruling was an eye-opener for private
equity firms and other entities owning controlling stakes in
faltering businesses. Breaking from the norm, the Delaware District
Court in Woolery v. Matlin Patterson Global Advisers, LLC refused
to dismiss private equity firm MatlinPatterson Global Advisers, LLC
(MatlinPatterson) and affiliated entities from a class action
lawsuit brought under the WARN Act alleging that the 400-plus
employees of Premium Protein Products, LLC (Premium), a
Nebraska-based meat processer and MatlinPatterson portfolio
company, had not received the statutorily mandated 60 days advance
notice of layoffs.
According to the plaintiffs, when Premium's performance
began to decline in 2008, the defendants became more involved in
Premium's day-to-day operations. The defendants made key
business strategy decisions (e.g., the decision to enter the kosher
food market) and terminated Premium's existing President and
installed a new
