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cfortunato, Attorney
Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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Is an employee of a bankrupt company entitled to payment for

Resolved Question:

Is an employee of a bankrupt company entitled to payment for accrued unpaid vacation time and sick leave?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.

Hi JACustomer,

When a company files a Bankruptcy, the employees may and may not receive accrued vacation pay and sick leave. Whether or not they receive this money will depend on other factors, such as how much total debt the company has.

However, any vacation pay and/or sick leave that accumulates within the 90 days before the company files a Bankruptcy is given priority status - which means these get paid before most of the company's other debts. Bankruptcy Stat. 507(a)(4). This does not mean, though, that the employees will get paid these benefits - it just means these benefits will be paid before other creditors get paid.


I think this is what you wanted to know. If not, please let me know.

Thank you!

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