The company I work for filed bankruptcy and owes me money. Will I get paid?

company bankruptcy

It can be unsettling if you hear that the company you work for has filed bankruptcy. Many employees assume that if their company filed bankruptcy, they are not going to get paid. While this may be true, it is not always the case. A bankruptcy filing does not necessarily mean that you will not receive unpaid wages. This will depend on what type of bankruptcy your employer has filed and where you rank on the list of those who are owed money.


If your company filed a Chapter 11 bankruptcy they are seeking legal relief from its debts while it reorganizes. The company intends to stay in business. If you are a current employee, your paychecks should not be interrupted. Your company still has a legal obligation to pay you even if they filed a Chapter 11 bankruptcy. If, however, you are not getting paid, you may want to start seeking employment elsewhere. Layoffs are very common in a Chapter 11 bankruptcy because it is a fast way to reduce expenses. If you are owed wages, you will have to file proof of claim with the bankruptcy court in order to get paid.

When you file a proof of claim with the bankruptcy court, you become a creditor of the company. The court will prioritize the creditors in the order they should be paid. If your unpaid wages were earned in the 180 days before the bankruptcy filing, you will be paid as a priority. While this does not necessarily mean that you will be paid first, it does mean that you will be paid before some other unsecured debts. The amount, however, is limited to $13,650. If the unpaid wages were earned more than 180 days before the bankruptcy filing your wages will not be considered a priority.


If your company filed a Chapter 7 bankruptcy, it intends to cease operations. This means they are closing their doors. The process to get paid is the same as in the Chapter 11 bankruptcy (see above). You will need to file a proof of claim with the bankruptcy court. In a Chapter 7 bankruptcy, the court will sell assets to pay off the creditors. If the company does not have any assets of has very little, you may not be paid. File your proof of claim as soon as possible to put the court on notice.

This article is intended for informational purposes only. It provides general information and is not intended and should not be construed as professional advice. The author is not your attorney, accountant, financial planner or any other professional and no professional-client relationship is created. We do not represent that the information provided is accurate or up-to-date as laws and regulations are always changing. If you have an issue that requires professional help, you should contact the appropriate professional to help you on your specific set of facts. Please read the Terms and Conditions for additional information.

Alicia Lillegard, Esq.

Alicia Lillegard has over 20 years of experience in employment law, human resources and insurance, working with with large blue chip companies, startups, and not-for-profit organizations. Ms. Lillegard is currently Managing Director of New England Human Capital, a human resources consultancy which advises small and midsize businesses on Human Resources compliance, including employment procedures, employee relations and employee benefits. She holds degrees from Loyola University Chicago and John Marshall Law School.

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