My employment contract has a severance clause for termination without cause. Does the apply in bankruptcy court?

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My employment contract has a severance clause for termination without cause. Does the apply in bankruptcy court?

I submitted a claim for my severance based upon my original employment contract. Will the California court make the debtor honor my contract if my termination was caused by bankruptcy? Also, cause was defined as fraud, felony, etc….not bankruptcy.

Asked on May 13, 2009 under Bankruptcy Law, California

Answers:

R.C., Member, Connecticut Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

A contract is a contract and it usually (though not always) is followed to the letter.  Unless your contract has a clause stating that you can be terminated without severance, for filing for or being granted bankruptcy, you cannot be denied your severance. On the other hand, is your ex-employer is complaining to the police that you committed fraud, felony, etc.?  Did you do anything that could be construed as fraud, felony, etc.?  If not, your employer is committing the fraud by falsifying your termination form , and you should consult a criminal attorney right away.  Otherwise, these criminal claims, which are not confidential, are going to follow you into your job search for a new job, and perhaps elsewhere.


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