Proof of Claim – Waiting To Post Instructions

I apologize for the delay in having easily accessible Proof of Claim instructions available here at Heller Highwater.  I’ve been getting quite a few emails over the past week and I think this is part of the reason:

as people receive their W-2 forms and sit down to do their taxes, they realize how much they got screwed over last year and realize they need to file the Proof of claim

Makes sense, no?  I’m with ‘ya!  I spent most of Sunday working on my taxes and it was really sad to see on paper what transpired financially for me and many other ex-Hellerites.

Why The Wait?

First, we still have time on our side with the April 27, 2009 deadline to file a Proof of Claim.

Second, I’d rather put out good and accurate information on how to file than have people re-file an amended Proof of Claim later on.

Third, the Priority portion claim is a sticky issue.  The court allows you to designate up to $10,950 of your claim as “priority” meaning it should be considered before all the other unsecured claims.  Determining what is and what is not priority is not easy.  Accrued vacation earned during the 180 period from the date of filing or cessation of business is priority.  But issues concerning WARN Act monies have not been resolved and case law on the issues does not make it any clearer.  

Fourth, calculating the amounts for the Proof of Claim are not easy.  I have updated the spreadsheet I created last month – this time with complex calculations based on your office location, your start date, your position – but I realize not all readers have access to Excel.  Also, I want to be able to explain the calculation process in plain English so it is understood.

Again, I just have to say “sit tight.”  My goal is to post the instructions by the end of this week – it is on my Getting Things Done list and calendar and I am committed to doing so.

Over and out.

Heller Drone,
Cruise Director 



20 Responses to “Proof of Claim – Waiting To Post Instructions”

  1. 1 Former SF Assoc 3 February 2009 at 1:09 pm

    Does anyone have any insight as to why they chose to not include WARN wages in their calculations of what we are owed that was filed with the Court? Just trying to figure out if there is any legitimate reason for not doing so, or if they are just trying to screw us.

  2. 2 Former Associate 3 February 2009 at 2:06 pm

    At a DLSE conference, Heller’s outside counsel from Manatt suggested that he may have disagreed with Greenberg Traurig’s initial guidance that WARN applied. Therefore, even though GT is still involved, maybe Heller has somehow been convinced to change its position. Of course, there are some serious obstacles to overcome now, like having issued WARN notices to employees and filed WARN notices with the state. But I’m sure that won’t stop them from trying to wiggle out of it.

    As a practical matter, one wonders why they even care at this point? If the estate is not going to be large enough to satisfy all creditors, then why short-change employees at the expense of other, less sympathetic (in my humble, unbiased opinion) creditors? Perhaps the shareholders think there is a chance that they will end up getting some of their capital back. As Observer has pointed out, Heller’s BK schedules indicate something like $130M in assets and only $41M in creditors (that number only includes employee vacation pay, which I think is around $10M; even if you triple that to include WARN and California waiting time penalties, total creditors’ claims are $61M).

    I’m really just guessing, though, so take this for what it’s worth.

  3. 3 Observer 4 February 2009 at 12:41 am

    Two factors occur to me (and I am guessing here too, until the firm eventually says something about it in court which would still be a ways off):

    1) The statutory amounts, such as WARN pay, are not easily calculated. Accrued vacation, their accounting system already had that data in the system. Path of least resistance for the firm was to make us do everything else via proofs of claim.

    2) There may indeed be some internal disagreement over whether WARN Act amounts are entitled to priority status. I need to take a look at the case law on that topic for myself, to see just how clear/unclear bankruptcy law actually is on that topic. We should see if we can get some common understanding of how that works; it would be better if our proofs of claim are not all over the place on these topics (divide and conquer is a favorite debtor strategy in Ch. 11).

  4. 4 concerned 4 February 2009 at 9:29 am

    I pose a question regarding WARN – if you left Heller voluntarily (without vacation pay, etc.) because you were offered another job, does WARN still apply through November 26, 2008?

  5. 5 Thomas MacEntee 4 February 2009 at 9:38 am

    I don’t believe WARN applies if your case. In my mind, the concept of WARN was to guarantee a job for 60 days (and Heller’s email of September 26, 2008 stated that there would be work for us through November 28, 2008). So if you found other work before November 28, 2008 you may not be entitled to the WARN Act monies – unless you had a gap of not working between your termination date at Heller and your start date at your new firm. That is if you were terminated and didn’t leave Heller on your own.

  6. 6 Former Associate 4 February 2009 at 12:03 pm

    This is not legal advice, but…

    I believe that Thomas is correct about WARN — it only applies if you were terminated by Heller. Those who left voluntarily will not have a WARN claim.

    Observer: I really appreciate your comments. I agree that vacation was easy to calculate (indeed, it probably didn’t even require calculation because it’s already in “the system”). But it seems that WARN wouldn’t really be that hard to calculate either, if they wanted to. Of course, it’s yet another thing they would have had to do, and your theory of divide-and-conquer makes sense.

  7. 7 Thomas MacEntee 4 February 2009 at 12:19 pm

    Former Associate

    You are right – WARN is not hard to calculate – in fact I have it in an Excel formula using the person’s termination date and the November 28, 2008 date. Luckily Excel has a function that only counts weekdays.

    In my case, I was terminated on October 10th and so I count 35 working days between that date and November 28th. Multiply it by my hourly rate and the number of hours in my working day, and viola! I have the WARN Act calculated.

    Playing a “game of chicken” with employees is the new way that many firms choose to operate rather than taking the high road. I use the “mail in rebate” analogy: stores love this because they know a certain number of consumers will just “forget”, some will just say “who cares” and some will not fill out the form correctly and get rejected.

    Same thing with bankruptcy: they know some of us won’t think it is worth the trouble to file a Proof of Claim, they figure that some don’t have the resources to hire counsel, and some of us will just forget and miss the deadline.

    Don’t be surprised if Heller tries to wiggle out of the WARN Act using some of the standard strategies (unforeseen circumstances, etc.).

    Here’s a question: with all the cross-office work and the whole “one firm” concept, could one argue that Anchorage, Madison or any of the smaller offices (under 50 or 100 employees) are still entitled to WARN Act monies even if the number of layoffs in that particular office were under the threshold (50 layoffs or more in CA, 100 on the Federal level)?


  8. 8 P-Owed 4 February 2009 at 9:23 pm


    What is the status of the class action suit led by Blum Collins?
    Has counsel come up with alternative strategies (suitable for posting online) to recover monies owed to us?
    What is the deadline for ex-employees to join?

  9. 9 Chopped Liver 4 February 2009 at 10:40 pm

    Blum Collins rocks (in the persons of Steve Blum and Craig Collins). Keep your eyes posted for details about our vigorous, astute, and intrepid new counsel.

  10. 10 HellBoy 5 February 2009 at 4:15 pm

    Thanks, Steve.

  11. 11 Another Former Secretary 6 February 2009 at 1:10 am

    Thomas, what if we were terminated by Heller, say on October 17th, and then took a position with another firm before the November 28th WARN act date?

    Do we calculate from our end date to the date we started at the new firm? Or do we calculate through November 28th on the theory that we wouldn’t have taken another job if the firm hadn’t been forced to dismiss us early?

    That’s the only complicated part I find in calculating. I started another job in November, but before Thanksgiving.

  12. 12 Thomas MacEntee 6 February 2009 at 9:09 am

    Your WARN Act monies would be the number of working days after October 17 and before you started your new position. As long as you were forcibly terminated by Heller and didn’t leave on your own accord.


  13. 13 Chopped Liver 6 February 2009 at 1:33 pm


    I’m under a different assumption than the explanation you provided to Another Former Secretary re how to calculate WARN Act monies.

    I’m a layperson, so take my advice with a big grain of salt, but I thought the WARN Act damages become liquidated on the date of the involuntary termination and that employees had no duty to mitigate by getting a new job.

    So, in the case of Heller Ehrman, if people were terminated on Oct. 10, they should obtain 7 weeks of liquidated WARN Act damages. If they were were terminated on Oct. 17, they should obtain 6 weeks of liquidated WARN Act damages.

    The way I will try to calculate my own WARN Act damages is to figure out the correct weekly value of Heller Ehrman contributions to my (1) base salary; (2) vacation; (3) health care; (4) life insurance; (5) retirement; and (6) miscellaneous other benefits. I’ll then multiply by the correct number of weeks remaining in the WARN Act notice. That will total my WARN Act damages, which I’ll add onto the other non-WARN Act damages (mostly, in my case, unpaid vacation).

    For those co-workers fortunate enough to obtain new employment prior to the conclusion of the WARN Act date of November 28, 2008, they should essentially receive a bit of a “windfall.” But, again, there’s no mitigation requirement in the WARN Act.

    Perhaps our new class-action counsel at Blum Collins can confirm which layperson analysis is correct — or whether we’re both barking up the wrong tree!

  14. 14 Anon 6 February 2009 at 3:04 pm

    This link has FAQs about the WARN Act. The third FAQ deals with employees getting a new job during the 60 day notice period.

  15. 15 Observer 6 February 2009 at 4:17 pm

    I have to agreen with Tom, and disagree with Chopped Liver, on how to calculate WARN days. I think the government information link posted by Anon is consistent with that.

    In terms of an example, this is how I would calculate it, for ex-employee “Smith”:

    On Sept. 26 firm notified Smith (and all of us) that Smith will be terminated as of Nov. 28 and gets paid for that 60-day period as long as Smith continues to show up for work.

    On Oct. 17 Smith is terminated, so has recieved less than the 60 days notice.

    On Nov. 15, Smith is fortunate enough to get a new job, which is prior to the Nov. 28 end of the WARN period.

    Smith’s WARN claim days: Oct. 18 thru Nov. 14 = 28 days.

    Somebody please correct me if I am wrong.

    On the ‘new job’ policy perspective: WARN is provided to give the employee transition time to go out and find a new job. When the employee succeeds in getting a new job, the policy has been satisfied and the old employer is no longer on the hook for WARN.

  16. 16 Former Associate 6 February 2009 at 4:58 pm

    I agree with your take. Suppose, just for fun, that the new job pays less than Heller did. Is the employee entitled to the difference between Heller and new job for the remaining WARN period? I found a lower paying job, but it was after the WARN period expired, so this doesn’t apply to me. I just thought it would be a fun issue to noodle on.

  17. 17 Observer 6 February 2009 at 5:42 pm

    FA, that’s an interesting question. But I haven’t seen anything that suggests getting a lower paying job enables you to claim the difference as WARN claim. The WARN Act seems to help if you remain unemployed, but doesn’t say anything about being under-employed.

  18. 18 Derner 6 February 2009 at 6:44 pm

    And how about freelancing?

    If I found some small freelance projects here and there before November 28, how will that impact my WARN claim?

    Let’s say I found 12 hours of freelance work during the WARN period?

  19. 19 Observer 6 February 2009 at 7:34 pm

    Derner, that is essentially my situation as well, some self-employment income in the latter part of the WARN period. My understanding is that I need to reduce my WARN claim by the amount of the self-employment earnings within the WARN period. I didn’t find another employee position though, so I think I need to credit the earnings rather than ‘days.’

    I can’t find any direct statement on this topic, but it is how I interpret the rules.

    Need to go by a public law library and have a look at a labor law treatise (and a bankruptcy law treatise), but haven’t made time to do that.

  20. 20 Derner 10 February 2009 at 4:37 pm

    Thanks, Observer.

    Considering that I didn’t receive payment for the work until well into December, I anticipate that I can claim a full WARN period.

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