Chapter 11 -- Priority of wrongful termination claim.

Discussion in 'Bankruptcy' started by mountainview_2006@yahoo.com, Oct 23, 2006.

  1. Guest

    I had filed a case in California state court against the company for
    wrongful termination (age discrimination). Before going to trial in
    State Court, the company filed for Chapter 11 in Bankruptcy court.

    I am deciding whether to pursue the case in BK court.

    I consulted with a BK attorney who advised me that if the claim can be
    shown to be for back wages then it would be considered a higher
    priority
    claim than claims of other unsecured creditors -- Back wages can be
    claimed up to a maximum of $10,000.

    But the attorney did not know if wrongful termination could be
    classified as back wages. My attorney in the state case was also not
    sure.

    The company has paid me for all work done. My case against them is for
    wrongful termination and demand for damages and/or reinstatement.

    Could the demand for reinstatement be classified as a higher priority
    claim, i.e., from the date of wrongful termination to the date the
    company could have legally terminated me?

    Are there any case precedents for this?

    I think I would only want to proceed if it could be classified as
    higher priority -- paid at 100% up to a maximum of
    $10,000 -- (anything beyond that would be normal priority unsecured
    claim with a fractional payout based on normal unsecured creditors.)

    If it could not be classified as high priority, then the claim is only
    limited to a fractional payout based upon the list of other unsecured
    creditors.
     
    , Oct 23, 2006
    #1
    1. Advertisements

  2. Kent Wills Guest

    I have it on good authority that on Mon, 23 Oct 2006 07:09:52 -0400,
    wrote:

    >I had filed a case in California state court against the company for
    >wrongful termination (age discrimination). Before going to trial in
    >State Court, the company filed for Chapter 11 in Bankruptcy court.
    >
    >I am deciding whether to pursue the case in BK court.
    >
    >I consulted with a BK attorney who advised me that if the claim can be
    >shown to be for back wages then it would be considered a higher
    >priority
    >claim than claims of other unsecured creditors -- Back wages can be
    >claimed up to a maximum of $10,000.
    >
    >But the attorney did not know if wrongful termination could be
    >classified as back wages. My attorney in the state case was also not
    >sure.


    I don't see how it could be viewed as back wages. You state
    you were paid for the work you did. What you are seeking appears to
    be punitive damages. If you win your case, you will join the other
    creditors as a normal priority debt.

    >
    >The company has paid me for all work done. My case against them is for
    >wrongful termination and demand for damages and/or reinstatement.
    >
    >Could the demand for reinstatement be classified as a higher priority
    >claim, i.e., from the date of wrongful termination to the date the
    >company could have legally terminated me?
    >


    I can't see it.

    >Are there any case precedents for this?
    >
    >I think I would only want to proceed if it could be classified as
    >higher priority -- paid at 100% up to a maximum of
    >$10,000 -- (anything beyond that would be normal priority unsecured
    >claim with a fractional payout based on normal unsecured creditors.)
    >
    >If it could not be classified as high priority, then the claim is only
    >limited to a fractional payout based upon the list of other unsecured
    >creditors.

    --
    Kent
    A woman is like a tea bag -
    Only in hot water do you realize how strong she is.
     
    Kent Wills, Oct 25, 2006
    #2
    1. Advertisements

  3. Barry Gold Guest

    Kent Wills <> wrote:
    [OP is pursuing a wrongful termination case against a corporation that
    is in Chapter 11 BK, wants to know if his claim can be considered
    "back wages" and hence have a higher priority than non-wage claims.]

    > I don't see how it could be viewed as back wages. You state
    >you were paid for the work you did. What you are seeking appears to
    >be punitive damages. If you win your case, you will join the other
    >creditors as a normal priority debt.


    But OP has also asked for reinstatement -- to be "made whole" by being
    put back in the situation he would have been if he had not been
    wrongfully terminated.

    If the court orders reinstatement, it would be fairly normal to also
    order payment of wages at his old salary(*) from the time of
    termination up to the time the order is issued. I think one could
    make a good argument that those are "wages" and entitled to the higher
    priority given under BK code.

    Frankly, if OP's lawyer can't figure out whether a reinstatement order
    will result in "back wages", I think he needs another lawyer.

    Now other damages, e.g., punitive damages, would be ordinary debts at
    a lower priority.

    I also note that the corporation is in Chapter 11, not Ch. 7. That
    implies that the business will continue to operate, and OP might be
    entitled to continued employement under a reinstatement order. Then
    he would continue to be paid, at the same priority as other employees.

    Also, a ch.11 filing usually implies that there is _some_ chance of
    the corporation emerging from BK to normal operation, if granted
    partial relief and extension of the time to pay debts. I would expect
    that to mean that the corporation's debts are worth at least, say,
    $.25 on the dollar. If the corp. is much deeper in debt than that, I
    don't see any way for it to ever recover.

    (*) possibly updated if the company was in the habit of giving regular
    raises, e.g., the average employee got a raise approximately equal to
    inflation once a year, even if labeled as "merit".
    --
    I pledge allegiance to the Constitution of the United States of America, and
    to the republic which it established, one nation from many peoples, promising
    liberty and justice for all.
    Feel free to use the above variant pledge in your own postings.
     
    Barry Gold, Oct 26, 2006
    #3
  4. peter law

    Joined:
    Jul 22, 2015
    Messages:
    1
    Likes Received:
    0
     
    peter law, Jul 22, 2015
    #4
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. Jasper Richards

    Wrongful/Fraudulent Trading

    Jasper Richards, Aug 25, 2004, in forum: UK Accountancy
    Replies:
    1
    Views:
    498
    Sinewave
    Aug 26, 2004
  2. Paul A. Thomas

    Re: IRS Practioner Priority Service

    Paul A. Thomas, Jul 29, 2003, in forum: Accounting
    Replies:
    0
    Views:
    611
    Paul A. Thomas
    Jul 29, 2003
  3. William Brenner

    Compensation For Wrongful Imprisonment

    William Brenner, Apr 30, 2008, in forum: Tax
    Replies:
    11
    Views:
    929
    D. Stussy
    May 1, 2008
  4. Brew1
    Replies:
    1
    Views:
    762
    paultry
    Feb 11, 2009
  5. Replies:
    2
    Views:
    513
  6. GeoFru

    Re: priority code

    GeoFru, Sep 7, 2006, in forum: Peachtree Accounting
    Replies:
    0
    Views:
    585
    GeoFru
    Sep 7, 2006
  7. Replies:
    1
    Views:
    601
    RudeDave
    Jun 14, 2006
  8. Dick Adams
    Replies:
    1
    Views:
    729
    Ron Rosenfeld
    Apr 23, 2011
Loading...