What consequences does bankruptcy have for my employees?
October 27, 2022 | 40,00 EUR | answered by Emma Fischer
Dear bankruptcy attorney,
My name is Tobias Koch and I am the managing director of a medium-sized company. Due to financial difficulties and declining sales, I am on the verge of filing for bankruptcy. In this difficult situation, I am very concerned about my employees and wonder what consequences bankruptcy will have for them.
Currently, I employ 20 staff members, all of whom are permanently employed and whose livelihood depends on their jobs at my company. I want to ensure that they are as well-protected as possible and that their rights are upheld if bankruptcy does occur.
My biggest concern is that my employees could lose their jobs and their financial situation could be severely affected as a result. Are there ways to preserve their jobs or should the employees expect termination? What about outstanding salary claims and how can they be pursued?
I want to act as a responsible employer and support my employees as best as possible. Therefore, I would be very grateful if you could explain to me the possible consequences of bankruptcy for my employees and provide me with possible solutions.
Thank you in advance for your help and support.
Sincerely,
Tobias Koch
Dear Mr. Koch,
Thank you for your inquiry regarding the possible consequences of insolvency for your employees. It is understandable that as a managing director in this difficult situation, you are concerned about the well-being of your employees and want to uphold their rights. In the following, I will address your questions and provide you with possible solutions.
In the event of insolvency of your company, there are various options to preserve the jobs of your employees. One option could be the continuation of the business within the framework of insolvency proceedings. In this case, an insolvency administrator can be appointed to continue the business and try to avoid insolvency. In this scenario, the jobs could be preserved, at least temporarily, until a final solution is found.
If redundancies do occur, certain legal regulations must be followed. For example, a mass redundancy notification is required if more than a certain number of employees are affected. In addition, notice periods must be adhered to and any severance payments must be made. It is important that you, as an employer, respect the rights of your employees and adhere to legal requirements.
Employees' outstanding salary claims can be submitted as insolvency claims in the insolvency proceedings. This means that employees can submit their outstanding salaries as part of the insolvency proceedings and are entitled to insolvency pay. This is paid by the labor office and serves as a replacement for missed salary payments.
To best support your employees, I recommend seeking early consultation with an insolvency law expert. They can inform you about your legal obligations and assist you with the insolvency proceedings. Additionally, you can communicate with your employees and inform them about the situation to alleviate any fears and uncertainties.
I hope that this information has been helpful to you. If you have any further questions or need assistance, please do not hesitate to contact me.
Best regards,
Emma Fischer
Insolvency Law Attorney
