Expert: Mark J. Markus- California Bankruptcy Attorney - 5/14/2009

Question
I left a very large corporation in November 2008 with a severance package that paid bimonthly for 9 months.  This very large company is most likely going to file bankruptcy before June 1st.  What happens to the 5 payments I am still owed?  Am I treated as an employee or a creditor?

Answer
That depends on what chapter of bankruptcy it files.  If you are owed money on the date the bankruptcy case is filed, you will have a claim for the wages owed which will get paid pro rata along with other unsecured creditors, if anything is paid to them (depends on the amount of assets being liquidated and distributed in a Chapter 7 case, or amount of the plan payments in a Chapter 11 case).