What Happens if My Employer Closes or Files for Bankruptcy?
Lately, not a day goes by that we do not hear about another well-known business filing bankruptcy due to COVID-19. In fact, I just came across an interesting article from NBC News. It is called Which major retail companies have filed for bankruptcy since the coronavirus pandemic hit? Here’s the list. While this article lists major companies forced into bankruptcy, there are also many smaller businesses in the same boat. As a bankruptcy lawyer, I know these types of bankruptcies will certainly impact thousands of workers. Thus, I am concerned for all of our friends and neighbors who will be affected in New Jersey.
I frequently get asked, what happens if my employer closes or files for bankruptcy? The first thing that comes to mind from this question is the scenario where an employer closes down for good. Those employees will be out of work. In the second half of the question, there is a glimmer of hope if the employer files a Chapter 11 bankruptcy for the purpose of reorganizing its debt or the purpose of a structured “going concern” asset sale In this scenario, it does not necessarily mean that employees will lose their jobs. Your employer should keep you informed. However, if you are concerned, we may be able to help you navigate the process as well.
Either way, if your company has closed its doors and you are suddenly out of work or if the business is restructuring, these are very troubling and scary times for any employee.
If you are in this situation, please consider the following:
Did you get a severance package? If so, how long can you sustain your current standard of living before it runs out? Will you need some help staying financially afloat when your severance runs out, assuming you have not been able to secure a new position? If you are able to transition to a new job, is it at the same or better income level or will you need some help adjusting your expenses to make it work on your new salary?
If you were not eligible for a severance package, are you eligible for unemployment? Is unemployment enough to pay your bills and stay current with your obligations until you find a new position? If the reduced income provided by unemployment is not going to cover all of your expenses, what will you do to stay afloat financially?
These are just a few examples of the many questions and concerns you may have when your company closes, downsizes, or restructures, whether through Chapter 11 or not. And these are all questions we here at Lucid Law can help you navigate. If you have lost your job or if you fear your job is at risk, don’t be afraid… call Lucid Law and let us help you get your financial grief managed!