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Unfortunately, federal bankruptcy law puts workers far down the list of who gets paid, after business creditors and legal fees for the bankruptcy itself It’s f

Unfortunately, federal bankruptcy law puts workers far down the list of who gets paid, after business creditors and legal fees for the bankruptcy itself It’s funny how the receiver’s fees always add up to exactly however much money is left in the company.

howard941 7y ago
There's no good way around the liquidating trustee's cut that doesn't involve replacing the trustee in bankruptcy with a government employee, but Congress expressed its preference to outsource this function to private entities and that's what we have Unfortunately, federal bankruptcy law puts workers far down the list of who gets paid, after business creditors and legal fees for the bankruptcy itself This is mostly correct but wrong enough to deserve a bit of elaboration and a link. The Bankruptcy Code treats a small portion of ordinary wages as priority debts that get paid ahead of some other unsecured creditors including unsecured business creditors, but always after administrative expenses, and it's not a lot of money. For the entire list of people who get paid before employees as well as the priority amount see https://www.law.cornell.edu/uscode/text/11/507 https://www.law.cornell.edu/uscode/text/11/507 section (A)(4)
ci5er 7y ago
It does? When I had to wind down a company in Austin, Texas, pretty much everyone in arbitration and court on all sides of the table recognized that workers got paid first. I wonder if that is local? I seem to remember that just about everyone was terrified of contingent WARN_Act violation related claims that could take up to 4 years to trickle in, and that was definitely federal.
- bluGill 7y ago
  Workers generally have everything except the last paycheck already. No sane business (don't take that as any claim that most businesses are sane) doesn't pay their people first. If you don't get a paycheck on a regular basis you won't come back, so even when things are going bad employees are getting their money while suppliers aren't getting anything. When it finally gets to bankruptcy employees aren't really owed much, so it shouldn't matter. Of course there are a lot of assumptions above. If any of the violations happen to you get ready to run before your good time is traded for more bad money.
  - ci5er 7y ago
    Fair enough. Thank you. I was mostly addressing the regulatory environment. I do not believe (unless I am very mis-informed) that employee paid wages are at the back-of-the-line in a liquidation procedure.
deleted 7y ago
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howard941 7y ago

There's no good way around the liquidating trustee's cut that doesn't involve replacing the trustee in bankruptcy with a government employee, but Congress expressed its preference to outsource this function to private entities and that's what we have Unfortunately, federal bankruptcy law puts workers far down the list of who gets paid, after business creditors and legal fees for the bankruptcy itself This is mostly correct but wrong enough to deserve a bit of elaboration and a link. The Bankruptcy Code treats a small portion of ordinary wages as priority debts that get paid ahead of some other unsecured creditors including unsecured business creditors, but always after administrative expenses, and it's not a lot of money. For the entire list of people who get paid before employees as well as the priority amount see https://www.law.cornell.edu/uscode/text/11/507 https://www.law.cornell.edu/uscode/text/11/507 section (A)(4)

ci5er 7y ago

It does? When I had to wind down a company in Austin, Texas, pretty much everyone in arbitration and court on all sides of the table recognized that workers got paid first. I wonder if that is local? I seem to remember that just about everyone was terrified of contingent WARN_Act violation related claims that could take up to 4 years to trickle in, and that was definitely federal.

bluGill 7y ago
Workers generally have everything except the last paycheck already. No sane business (don't take that as any claim that most businesses are sane) doesn't pay their people first. If you don't get a paycheck on a regular basis you won't come back, so even when things are going bad employees are getting their money while suppliers aren't getting anything. When it finally gets to bankruptcy employees aren't really owed much, so it shouldn't matter. Of course there are a lot of assumptions above. If any of the violations happen to you get ready to run before your good time is traded for more bad money.
- ci5er 7y ago
  Fair enough. Thank you. I was mostly addressing the regulatory environment. I do not believe (unless I am very mis-informed) that employee paid wages are at the back-of-the-line in a liquidation procedure.

deleted 7y ago

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