There Is Help. There Is A Solution.
Contact Us Today! 603-635-4149

Paying your employees during bankruptcy

Market saturation, liability issues, or a sagging economy all rank among the factors that can impact the overall performance of your business. Many business owners in Hillsborough County come to us here at The Law Office of Paul Petrillo after struggling with such issues believing that bankruptcy is the only viable option they have to get out from under their debts. If you are considering the same thing, know that you are not alone; the American Bankruptcy Institute reports that over 24,700 business bankruptcy cases were initiated in 2015 alone. While such action may help you in dealing with your business’ debts, another concern may remain: paying your employees.

How this will happen depends upon the type of bankruptcy case you file. If you file for Chapter 7 bankruptcy, your unpaid employees join the ranks of your unsecured creditors. Upon the liquidation of certain business assets, they will be paid according to your creditor hierarchy. Secured creditors are paid first, and then your unsecured creditors are left to share your remaining assets.

Your employees, however, may be given priority out of this group. According to the Society for Human Resource Management, unpaid employees may receive compensation of up to $10,000 individually for any salaries or commissions owed to them for up 180 prior to your seeking bankruptcy protection. The amount they actually receive will of course depend how much you have in remaining assets after paying your higher priority creditors.

If you are trying to reorganize your business through a Chapter 11 bankruptcy, then meeting payroll may be moot point given that you still may generate revenue through your continued operations.

You can find out more about managing a business bankruptcy case by continuing to browse through our site. 

No Comments

Leave a comment
Comment Information

Law Office of Paul Petrillo
One Tara Boulevard
Suite 200
Nashua, NH 03062

Phone: 603-635-4149
Map & Directions

Google Map