Chapter 11 -- Priority of wrongful termination claim.


M

mountainview_2006

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.
 
K

Kent Wills

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

Advertisements

B

Barry Gold

[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".
 
Ad

Advertisements

Joined
Jul 22, 2015
Messages
1
Reaction score
0
Country
United States
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.
 

Ask a Question

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

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top