How doesan employeecollect salaryowed to them by a bankrupt business?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
How doesan employeecollect salaryowed to them by a bankrupt business?
My daughter worked for an LLC company that declared bankruptcy. She was not paid for work that she had done. Can she attempt to get payment and where should she file?
Asked on August 3, 2010 under Bankruptcy Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
1) She can put in a claim with the bankruptcy court. If she was an employee (not an independent contractor), her claim for wages or salary will have relative priority. That means that IF there is any money left, after paying any higher priority debts (of which there are few; e.g. expenses of the bankruptcy itself), there's a decent chance she'll get something. Of course, if there simply is no money--not uncommon when a small business goes bankrupt--there will be no recourse or recovery.
2) Unfortunately, a limitied liability company insulates its owners from liability--i.e. company debts do not become debts of the owners. Therefore, your daughter cannot proceed against the owners.
This then may be a case where your daughter does not have any mechanism to be paid.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.