If a company files Ch 11 bankruptcy then the assets are sold to another company, are employment contracts honored?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
If a company files Ch 11 bankruptcy then the assets are sold to another company, are employment contracts honored?
If a company files Ch 11 bankruptcy, then the assets (including employees) are sold to another company and the judge grants the sale, does the new company have to honor employment contracts or do they become void and new ones have to be signed?
Asked on March 30, 2012 under Bankruptcy Law, Texas
Answers:
Michael Duffy / Duffy Law, LLC
Answered 12 years ago | Contributor
Hi there,
It would likely be at the discretion of the bankruptcy trustee. If the trustee decided it would be in the best itnerests of the creditors and necessary for the survival of the company to void and/or renegotiation certain contracts, then they are generally permitted to do so. If you're question is in regards to organized labor, the old contract might be voided by the new owner would still likely have to renegotiate a new contract with the union.
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.