Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
Your employer cannot enter into such an agreement, because by forgiving a debt at the instant of bankruptcy, the employer would be transferring the value of the debt to you for less than "reasonably equivalent value," which is a fraudulent transfer under the bankruptcy code -- and, the bankruptcy trustee can avoid the transfer and reinstate the note against you.
However you choose to write the note, the forgiveness must be based on some trigger other than the employer's insolvency.
It would be better if there was something completely unrelated to employer performance. Maybe, the employer could offer you a fixed-term employment contract. And, as part of the note, you could agree that the employer has the option of terminating your employment before the contract's agreed-upon termination date, in exchange for forginving the note.
Thank you for your second reply. Please excuse the fact that, until now, I have not "accepted" your answer. I was thinking about your second answer and whether I had any follow-up questions, which I currently do not. I am now "accepting" your answer.
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