Can an employer include what he owes his employees in payroll in bankruptcy?

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Can an employer include what he owes his employees in payroll in bankruptcy?

My last 2 checks ($1800) bounced. I heard he is filing for bankruptcy.

Asked on July 29, 2011 Colorado

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

I assume since this is the second check that has bounced, you have already spoken to your employer about this. If not do so ASAP. If a bankruptcy is filed you won't be able to get a replacement check. Instead, in that event, you will become a creditor of the company. Your unpaid wage, vacation pay and/or like claims will rank as "preferred" claims in a bankruptcy proceeding (behind "secured" creditors but ahead of ordinary creditors). 

Once you have official notice of the bankruptcy filing (and as a creditor you will get one) you will need to file a wage claim. There will be a meeting of creditors (although you do not need to attend).  Employees who are owed wages will share in the remaining assets of their bankrupt employer.  In some cases, there will be sufficient assets to satisfy employee claims in full; in others, employees may be compensated for only a portion of their claims; or in still other cases they will receive nothing at all.


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