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Roger
Roger, Attorney
Category: Bankruptcy Law
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I am the president and a board memmber of a $10 million business

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I am the president and a board memmber of a $10 million business going bankrupt and the board has resolved to assign the business to the trust of a liquidator for the benefit of creditors... I have not resigned or quit... Is my severence package valid and can it be paid out by assigned trustee for liquidation of the company... as my employement agreement becomes assigned to this liquidiator?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 4 years ago.

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.

Customer: replied 4 years ago.

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??

Expert:  Roger replied 4 years ago.
Yes, you can do this. All companies have to wind up business. You could have the employer couch your severance in terms of an administrative expense in closing/selling the company.
Customer: replied 4 years ago.

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...

 

Expert:  Roger replied 4 years ago.
There is no required language. You just need to get in writing that your severance pay is for administrative work to be performed during the closing out and/or selling of the company.

Because your fee is in irreducible after bankruptcy is filed, you will have the best opportunity to be paid.
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26157
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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