How does insolvency affect my employees?
August 19, 2023 | 40,00 EUR | answered by Katja Winterberg
Dear bankruptcy lawyer,
I am reaching out to you because I am in a difficult financial situation and I am worried about my employees. My name is Sophia Lindach and I run a small company that is on the brink of bankruptcy due to loss of revenue and financial problems.
My employees are like family to me and I want to ensure that they do not have to suffer the consequences of bankruptcy. It is important to me that they continue to receive their income and do not have to worry about their livelihoods. I would like to know how bankruptcy would affect my employees and what options are available to protect them as best as possible.
Currently, we are in a precarious situation where we are struggling to cover the ongoing costs and pay salaries on time. I am very concerned about the jobs of my employees and I want to do everything in my power to support them.
Could you please explain to me the potential impact of bankruptcy on my employees and what measures I can take to protect their interests? Are there any legal provisions that can help me protect my employees as best as possible? I would greatly appreciate your support and expertise in this difficult situation.
Sincerely,
Sophia Lindach
Dear Mrs. Lindach,
Thank you for your inquiry and your trust in my expertise as a lawyer specializing in insolvency law. I understand your concern for your employees and their jobs, as well as your desire to avoid existential fears in case of insolvency. It is commendable that you view your company and employees as a kind of family, with their well-being being a top priority.
Insolvency can indeed have serious repercussions for your employees. In the event of insolvency, as an employer, you must adhere to certain legal regulations to protect the interests of your employees as best as possible. It is important to know that in the insolvency process, the claims of creditors, including the salary claims of your employees, are satisfied according to a predetermined hierarchy.
The salary claims of employees hold a high priority and are typically paid before other claims. Your employees generally have a legal right to receive their outstanding salaries in the event of insolvency. If your company does not have sufficient financial resources to pay the salaries, insolvency benefits can step in.
Insolvency benefits are paid by the Federal Employment Agency and serve to cover the outstanding salaries of employees for a certain period. In this case, your employees do not have to worry about their income and are protected from extreme existential fears. It is important as an employer to submit applications for insolvency benefits on time to ensure the payments for your employees.
Furthermore, you should transparently inform your employees about the financial situation of your company and actively involve them in the insolvency process. Open communication and involving employees in decision-making processes can help strengthen trust and alleviate fears.
It is advisable to consult an experienced insolvency lawyer early on, who can support you in all legal questions and steps in the insolvency process. A good insolvency lawyer will help you protect the interests of your employees and work with you to find solutions to mitigate the impact of insolvency as much as possible.
I hope this information is helpful to you and I am available for further questions and support. Please do not hesitate to contact me if you need further advice.
Best regards,
Katja Winterberg, Lawyer specializing in insolvency law
