vacation pay

AnnieOhio

If an employer has a prescribed vacation policy and is stated in its employee manual, and that employer finds itself facing a Chapter 13 Bankruptcy, is said employer required to pay its employees wages and accrued vacation first with any cash assets at time "the doors are closed"?

Don D

AnnieOhio: If your company is faced with this, your company bankruptcy attorney is the source for the quickest answer. If you are asking from an employee's perspective, your personal attorney is your best source for an answer. Be careful about the opinions of the masses though! You know what they say about opinions. Everybody thinks they should be first in line when companies declare bankruptcy. Only the courts can sort it out.

Brad Forrister

Chapter 13 is for individuals, not employers.
But under Chapter 11, the chapter for companies, the doors shouldn't close.
Chapter 11 allows a company to work out a plan to continue in business.
Chapter 7 is the door-closing version.

Beyond that, Don D's advice is good.

Brad Forrister
Director of Publishing
M. Lee Smith Publishers

Theresa Gegen TX

Really any company that goes into bankruptcy needs to let the bankruptcy trustee determine how money is paid. Bankruptcy law makes certain creditors priority (for example, claims for unpaid wages and creditors with security interests would generally come before other claims - I imagine the wage claims would be for actual hours worked, and vacation pay may be lower on the priority). But any payments made shortly before going into bankruptcy can be reexamed by the bankruptcy court and recouped as part of the estate (this is to avoid a person or entity impairing the rights of certain creditors by depleting the assets in the estate).

As you can see, this is a complicated area and Don D's advice, about relying on bankruptcy specialists is the best!

Good Luck!