Employee Rights in Chapter 7 Small Business Bankruptcy

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16 years ago 10/18/2007 11:08am EDT

Of course I would ask this question on LetsRun.com.

So, my company is possibly filing for Chapter 7 - it filed Chapter 11 3 months ago. Not totally sure, but better safe than sorry I say so that's why I'm asking. I have a bunch of inquiries out to some lawyers and the Department of Labor, etc. but thought this might result in a faster response...

As an employee what are my rights?

Does the company, if it files for Chapter 7, have to pay my back salary that I am owed (i.e. the first week's pay that was held until I would have left the firm, pay from the weeks worked between the last paycheck and the filing, travel expenses already billed to the company from a business trip, etc.)

What if the company owes money into my IRA (yes, I know, totally illegal to hold money meant for a retirement fund and not give it to me in my paycheck even, but it's an issue)? So this money...is that required to be paid?

The employees are generally the second in line behind secured creditors, correct?

Just any general information would be great.

Thanks, LetsRun!

16 years ago 10/18/2007 11:29am EDT

re: TPaine

first, this is chapter 7 so they don't "have to" pay anything to anyone if they have no money/assets. that said, if they do have the ability to pay creditors, employees have a priority claim for wages, salaries, and commissions earned in the 180 days prior to the filing up to $10,000. this priority sits behind secrued creditors and administrative claimants (these include employees with wages etc. after the bankruptcy filing; taxes; professional fees after the bankruptcy filing). there are obviously some other permutations to this but that's the basics.

in your particular case, the expenses wouldn't get a priority. the first week's pay would not get a priority. you'd have an unsecured claims for these. the IRA would also likely be an unsecured claim, though i'm not familiar with the situation you're in with that.

16 years ago 10/18/2007 12:21pm EDT

re: TPaine

TPaine wrote:
As an employee what are my rights?
Just any general information would be great.
Thanks, LetsRun!

My advice is to figure out how much you are owed and then steal that amount worth of office supplies.

Return a portion of the supplies, based on what you get paid.

You can never take too many staplers.

16 years ago 10/18/2007 12:59pm EDT

re: chuck d

Thanks, Chuck D, can always rely on your legal input. That's pretty much what I've found out from my other sources as well. It's a pretty absurd situation. Now it's just a matter of how things play out.

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