Legal Question in Bankruptcy in Utah

back pay to be used at a bankruptcy auction?

My company went out of business and they owed me 1 month worth of salary and vacation. They filed chapter 7 bankruptcy. They are auctioning the property and I would like to use my back wages to purchase some of the equipment. What Do I need to file to use back pay as credit at the auction?


Asked on 4/06/01, 2:56 am

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

Re: back pay to be used at a bankruptcy auction?

The sale is being conducted by the Trustee who is the court representative of the unsecured creditors of which you are one. As an employee your wages claim is a priority claim, meaning that it gets paid before other unsecured claims. However, there is no mechanism to allow you to "bid" your claim at the auction. The reason is that the Trustee will not know how much money will be available to pay claims like yours - so you may only get part of your wages if there is not enough money to pay all unsecured priority claims. Thus the Trustee cannot allow you to "bid" your wages, when there may not be enough money recovered at the auction to pay everyone 100%.

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Answered on 6/06/01, 9:49 am


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