Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
When a company files a petition in Bankruptcy Court for protection from its creditors, anyone owed severance is considered just that: one of those creditors. As a general rule, if you are owed severance monies, and your employer files for bankruptcy protection, you will be treated just like any other "unsecured creditor."
This is the group of creditors who are last to be paid, if they are paid at all, in a bankruptcy. Employees owed severance will likely lose whatever severance monies have not been paid as of the date of the bankruptcy court filing, or close to all of that amount. Unsecured creditors - including those owed severance - usually receive only pennies on the dollar owed, and it might even take years to collect.
The best thing you could do to guarantee a severance is to get it in a lump sum. Otherwise, you may not get what you bargained for.
The liguidating trustee / assinee... will be attempting to sell the book of business still worth $8 million. Being in my position, I have a number of good contacts to business owners/leaders of similar business that this bankrupt entithy I am in.
Do I have any leverage to negotiate some or all of my severence or to a paycheck with Assignee if I help them to sell or work deal with another party that would enable the Assignee an oppportunity to get maximum remaingin value for the book of business?
If so what is typically agreed upon... a some part of severance, a paycheck for x period, a percentage of the effecitve sale or transfer value of the business, etc??
Is there some reference / website, etc or do you have an example of the genreal language of how to express this in language appreciated by the Assignee...