Legal Question in Bankruptcy in California
Bankruptcy and Severance packages
I signed and was set to receive a severance package from my former employer after they decided to close all operations in the State of California. I was eligible for this package as long as I stayed on for the next 60 days as they closed operations, which I did. Today they called me and told me they had declared Chapter 11 bankruptcy and that I would not be getting this severance package they had signed and promised. What are my legal options at this point? I thought employee�s severance/pay were protected in cases like this after Enron and such? Please advice, thanks for any help.
1 Answer from Attorneys
Re: Bankruptcy and Severance packages
Under Section 507 of the bankruptcy code, things like wages and severance pay earned by an individual earned within 90 days before the date of the filing of the petition or the date of the cessation of the debtor�s business, whichever occurs first, is entitled to priority over many other types of creditors. The maximum amount of your priority is $4000. Any claim you have above $4000 is treated as a general unsecured claim.
In a Chapter 11 case, the debtor will propose a Plan of Reorganization that will eventually be voted on by the creditors. The plan will specify how the debtor proposes to pay all creditors and how much they will be paid.
You'll need to file a Proof of Claim with the court within the time allowee by law. Feel free to contact me office if you need further assistance.
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