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Remember, in bankruptcy court labor related claims always get the highest priority.
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Employees have a priority claim for up to $10,000 in wages, according to bankruptcy law. This means that employees' claims are among the first to be addressed in court, and, it is hoped, among the first to be paid.
But there's a catch or two.
"Only wage claims earned within 180 days before the bankruptcy filing are entitled to priority," says Fred Corbit, a consumer lawyer working for the Northwest Justice Project, a public interest law firm.
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Although "an employee is entitled to be paid if there is money in the estate," a failed business doesn't always have money left over after starting legal proceedings, Corbit says. The last of a company's savings can be consumed by administrative expenses, which come before wage claims in priority.
Amounts over $10,000 are harder to recover because they exceed the maximum priority claim established by bankruptcy code.
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The Fair Labor Standards Act, or FLSA, which ensures that nonexempt employees (hourly employees not exempt from overtime pay) are entitled to wages earned, does not address accrued sick and vacation time and bonuses proffered, according to the federal Department of Labor.
However, bankruptcy code does say that employees are entitled to sick, vacation, bonus and commission pay, as long as it earned within 180 days before bankruptcy.
Future medical benefits also may be in jeopardy after a bankruptcy. If your company continues to exist under Chapter 11 bankruptcy, you may qualify for an extension of medical benefits under COBRA for a limited amount of time.
http://www.bankrate.com/brm/news/pf/20090102_surviving_workplace_bankruptcy_a2.asp
I believe these employees have already been paid.
