611 B.R. 160 (Bkrtcy.S.D.N.Y. 2020), 16-10407 (SMB), In re TransCare Corp.

Docket Nº:16-10407 (SMB)
Citation:611 B.R. 160
Opinion Judge:STUART M. BERNSTEIN, United States Bankruptcy Judge
Party Name:IN RE: TRANSCARE CORP., et al., Debtors. v. TransCare Corp., TransCare New York, Inc., TransCare Ml, Inc., T.C. Ambulance Group, Inc., TransCare Management Services, Inc., TCBA Ambulance, Inc., T.C. Billing and Services Corp., TransCare Westchester, Inc., TransCare Maryland, Inc., T.C. Ambulance North, Inc., TransCare Harford County, Inc. Lynn ...
Attorney:OUTTEN & GOLDEN LLP, Jack A. Raisner, Esq., René S. Roupinian, Esq., Robert N. Fisher, Esq., Of Counsel, Attorneys for Plaintiff PROSKAUER ROSE LLP, Nicole A. Eichberger, Esq., Gillian G. Egan, Esq., Kathleen M. McKenna, Esq., Of Counsel, Attorneys for Non-Debtor Defendants LAMONICA HERBST & MANI...
Case Date:January 10, 2020
Court:United States Bankruptcy Courts, Second Circuit

Page 160

611 B.R. 160 (Bkrtcy.S.D.N.Y. 2020)

IN RE: TRANSCARE CORP., et al., Debtors.

Shameeka Ien on behalf of herself and all Others similarly situated, Plaintiff,

v.

TransCare Corp., TransCare New York, Inc., TransCare Ml, Inc., T.C. Ambulance Group, Inc., TransCare Management Services, Inc., TCBA Ambulance, Inc., T.C. Billing and Services Corp., TransCare Westchester, Inc., TransCare Maryland, Inc., T.C. Ambulance North, Inc., TransCare Harford County, Inc. Lynn Tilton, Ark. II CLO 2001-1 Limited, Ark. Investment Partners II, L.P., Patriarch Partners, LLC, and Patriarch Partners III, LLC, Defendants.

No. 16-10407 (SMB)

Adv. Proc. 16-01033

United States Bankruptcy Court, S.D. New York

January 10, 2020

Page 161

OUTTEN & GOLDEN LLP, Jack A. Raisner, Esq., René S. Roupinian, Esq., Robert N. Fisher, Esq., Of Counsel, Attorneys for Plaintiff

PROSKAUER ROSE LLP, Nicole A. Eichberger, Esq., Gillian G. Egan, Esq., Kathleen M. McKenna, Esq., Of Counsel, Attorneys for Non-Debtor Defendants

LAMONICA HERBST & MANISCALCO, LLP, Joseph S. Maniscalco, Esq., Holly R. Holecek, Esq., Of Counsel, Attorneys for Debtor-Defendants

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

STUART M. BERNSTEIN, United States Bankruptcy Judge

This class action concerns claims under the Worker Adjustment and Retraining

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Notification Act ("US WARN Act"), 29 U.S.C. § 2101 et seq., and the New York Worker Adjustment and Retraining Notification Act ("NY WARN Act"), New York Labor Law ("NYLL") § 860 et seq. (collectively, the "WARN Acts"), as well as unpaid wages under various state laws. The Plaintiff filed this motion for partial summary judgment, (see Plaintiff’s Memorandum of Law in Support of Motion for Partial Summary Judgment, dated May 21, 2019 ("Motion ") (ECF Doc. # 123)), contending that the notices sent to the Debtors’ employees did not satisfy the requirements of the WARN Acts and, consequently, the Debtor Defendants and Non-Debtor Defendants cannot assert certain statutory defenses discussed below.1 For the reasons that follow, the Motion is granted in part and denied in part.

BACKGROUND

At all relevant times prior to February 24, 2016, TransCare Corporation and its subsidiaries ("TransCare" or "Debtor Defendants") provided ambulance and paratransit transportation services in New York, Pennsylvania, and Maryland. The subsidiaries included TransCare New York, Inc., TransCare ML, Inc., T.C. Ambulance Group, Inc., TransCare Management Services, Inc., TCBA Ambulance, Inc., T.C. Billing and Services Corp., TransCare Westchester, Inc., TransCare Maryland, Inc., TransCare Harford County, Inc., and T.C. Ambulance North, Inc. (collectively, with TransCare Corporation, the "Initial Debtors") and TransCarePennsylvania, Inc., T.C. Ambulance Corporation, and T.C. Hudson Valley Ambulance Corp. (collectively, the "Subsequent Debtors"). Facing financial problems, TransCare and those who controlled it2 embarked on a restructuring plan. They would terminate the operations of the Initial Debtors and continue the operations of the Subsequent Debtors through the foreclosure of their assets and the assignment of those assets to two new entities: Transcendence Transit, Inc. and Transcendence Transit II, Inc. (collectively, "Transcendence"). Under this plan, approximately 700 employees of the Subsequent Debtors would continue to work for Transcendence and it would be business as usual.

On February 24, 2016, the Initial Debtors filed for bankruptcy under chapter 7 of the Bankruptcy Code in this Court, and Salvatore LaMonica, Esq. was appointed chapter 7 trustee ("Trustee"). Earlier that day, the employees of the Initial Debtors had received3 an email ("First February

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24 Notice") that described the plan just mentioned. After explaining that the paratransit and Pittsburgh and Hudson Valley ambulance businesses would continue to operate through Transcendence and save 700 jobs, the email continued: Sadly, as a result of a decision by our senior lender to cease providing additional funding, the remaining operations (NYC 911, Core, Westchester and Maryland), which have continued to face significant challenges throughout the restructuring process, are being forced into liquidation under Chapter 7 of the Bankruptcy Code. The operations associated with these businesses will discontinue starting today and responsibility for their remaining assets will be transferred to the custody of a court-appointed trustee.

For those at work currently or scheduled to work today, please continue your usual good service until such time as you hear from the court appointed Trustee. We expect the appointed trustee to be able to provide you with further direction and answers to your questions in the days ahead.

Please know that we have worked hard for months now to restructure the entire business. Unfortunately, today’s events made that impossible, and we are deeply sorry for the job losses and any service interruptions for the communities we have served.

(Raisner Declaration, Ex. K (ECF Doc. # 123-14); accord Ex. M (ECF Doc. #123-16).) The First February 24 Notice was issued by Glen Youngblood, a TransCare vice president, and signed "From the TransCare Management Team" but contained no contact information.

Later that same day, after the Initial Debtors had filed their chapter 7 cases, Youngblood drafted an "update" ("Second February 24 Notice") which was apparently sent to all employees and held out the hope of continued employment with the Initial Debtors for an indefinite period: We are writing to be certain that the information people are receiving about the TransCare restructuring is accurate. As we noted in our earlier communication, we have been working for months to try to restructure the business and save the jobs of our valued employees.

Unfortunately, one of our senior lenders decided to cease funding, and we have been forced to file certain of our business units -- the NYC 911, NYC Core, Westchester and Maryland businesses -- for Chapter 7 bankruptcy.

These businesses have NOT been immediately shut down.

Tomorrow certain assets of TransCare will be in the hands of a court appointed trustee who we expect will have the needed runway to effect an orderly wind down.

As stated previously, TransCare’s existing ambulance divisions in Pittsburgh and the Hudson Valley will be acquired by Transcendence Transit, Inc. Aside from the name of the new legal entity, nothing will change operationally for these businesses or their respective employees.

In addition, TransCare’s paratransit business will be acquired by Transcendence Transit II, Inc. No positions in this business will be eliminated as a result, and all employees of the paratransit business will be employed by this new legal entity.

We believe that through these restructuring efforts we have been able to save 700 jobs. While we are disappointed that we could not save all the business units

Page 164 and jobs, we are grateful that much of TransCare’s history can live on.

(Id., Ex. P (bold face in original) (ECF Doc. # 123-19).) This email was also signed by "The TransCare Management Team" with no other contact information. Although the...

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