Does bankruptcy mean I lose severance?
I was laid off from an IPO start up company on Dec 18, 2000 during this time I signed an agreement stating I would be paid for my remaining vacation time and 2 weeks severance pay. The company filed Chapter 11 on Dec 20, 2000 does this mean they are no longer obligated to pay me?
1 answer | asked Mar 15, 2001 8:29 PM [EST] | applies to New York
Answers (1)
Bankruptcy laws protect wages, but not severance p
Generally, an employer who files Chapter 11 still has an obligation to pay employees for work that was performed, but it may take significant time before it does so. Under bankruptcy law, wage claims enjoy a very high priority among the debts of a bankrupt company. Severance pay and vacation time may be a different story. If they are not considered wages for work performed, the bankrupt employer may be able to avoid paying them (at least not in full). You mentioned a contract. What did you agree to?
I do not believe that the bankruptcy prevents your filing for unemployment compensation and that may be the best alternative.
posted by Craig J.J. Snyder | Feb 19, 2001 2:05 PM [EST]
Generally, an employer who files Chapter 11 still has an obligation to pay employees for work that was performed, but it may take significant time before it does so. Under bankruptcy law, wage claims enjoy a very high priority among the debts of a bankrupt company. Severance pay and vacation time may be a different story. If they are not considered wages for work performed, the bankrupt employer may be able to avoid paying them (at least not in full). You mentioned a contract. What did you agree to?
I do not believe that the bankruptcy prevents your filing for unemployment compensation and that may be the best alternative.
posted by Craig J.J. Snyder | Feb 19, 2001 2:05 PM [EST]
Answer This Question
Sign In to Answer this Question
Related Questions with Answers