An employer's chapter 11 filing has a number of immediate effects on all of its creditors, as well as certain longer-term ramifications specific to retirees and Union employees: anthony hamilton on tour
- Wages for work you perform after your employer files for bankruptcy are entitled to administrative expense priority, meaning they get paid before nearly all other creditors.
- Wages and certain benefits already earned before the filing date are also entitled to administrative expense priority, subject to certain dollar limits. Employers typically request permission from the court at the outset of chapter 11 cases to pay pre-filing employee wages and benefits in the ordinary course of business.
- Your employer can seek court approval to reject your its labor agreement with the Union, but must first try to negotiate "necessary" modifications to the contract.
- Regardless of the outcome of contract negotiations, TWU remains your authorized bargaining representative in a chapter 11 bankruptcy. This means that your employer must bargain with TWU in good faith, and even if your employer rejects its contract with TWU it still must bargain with TWU pursuant to the federal labor laws.
- The automatic stay halts any existing litigation or debt-collection activity against the debtor while its case is ongoing. Such action may only resume if the bankruptcy court grants a lift-stay motion.