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What happens to employees when their employer goes bankrupt? Atlanta, GA

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What happens to employees when their employer goes bankrupt?

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Throughout the ongoing economic recession, a number of companies in Georgia and throughout the country have become insolvent and have been forced to file for bankruptcy. This has left many employees facing job loss and wondering about what they may be entitled to and what is going to happen next.

The good news is that employees of companies in bankruptcy are protected in some areas. By law, employees who are laid off as the result of a bankruptcy are, in many cases, legally entitled to be given advance notice of separation.

The Worker Adjustment and Retraining Notification Act (WARN) requires that employees be given advance notice of any shutdowns or layoffs. Under the federal law, companies with 100 or more employees must give a notice of at least 60 days, although some states require longer notification periods. Companies that fail to give advance notice to employees as required by WARN may end up paying severance for the requisite time period.

However, employees that are entitled to back pay and severance may not receive it if company assets are not sufficient to pay their claims. But they will likely receive any earned wages, as such payments have first priority over claims made by creditors in a Chapter 11 bankruptcy.

In addition, employees’ health insurance benefits will end if the company is no longer able to pay for them. Employees are generally still entitled to keep health benefit coverage for up to 18 months as allowed by COBRA if they pay the monthly premium.

Money that is set aside in 401(k) and other retirement plans, including payouts from employers, are not affected by a bankruptcy. This is because the money belongs to the individual employee and not the bankrupt company. Employees laid off in a bankruptcy are also eligible to file for and receive unemployment compensation benefits as regulated by federal and state laws.

Source: Main Street, “Your Company Went Bankrupt: Now What?” Jeanine Skowronski

Posted on behalf of Gingold & Gingold

1718 Peachtree St NW, #385
Atlanta, GA 30309

Phone: (404) 685-8800

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Gingold & Gingold LLC
5.0 / 5.0

Based on 28 reviews

Jack L.

They did an excellent job with my case. Jamie took the time to really listen and understand things. She delved into the details and was extremely knowledgeable and non judgmental. Very professional and they know what they are doing. Would definitely recommend!

All C.

Mr. Gingold was recommended by an attorney I had worked with previously. I met with Ira Gingold to discuss credit issues. He went over each specific issue thoroughly. He advised me of the potential outcomes. He did all this in one meeting for a very reasonable price. When we finished I was confident in moving forward with a resolution. He definitely wants to help people take the appropriate course of action for their circumstance.

Karen B.

Dear Mr Gingold, There are so many reasons to be thankful for all you have done and will do. Anyone who has ever had unfavorable experiences with an attorney or the legal system will feel the trepidation that I experienced once I realized that my situation seemed hopeless. It was by chance and happily good luck that I decided to put my future and sanity into your hands. I was mortified at having to deal with my debts by claiming bankruptcy. I remember in our first meeting how you assured me that I was not alone and should not feel ashamed. And, anyone in this position obviously does not have money to spare and you were clear about all the costs and allowing me to pay according to my own ability to do so. You advised me in all aspects of the law, but also, you were at each meeting incredibly supportive and complementary of my personal and professional plans. Anyone else in this situation should feel blessed to have access to your expertise and support.

Lyla B.

I thought the process of filing bankruptcy was going to be a difficult one. However, Gingold & Gingold treated me with respect and dignity from the moment I walked through their door. I had the pleasure of working with Jamie. She is very responsive, professional, and knowledgeable. She took the time and listened to my every concern and handled each and every one of them to my satisfaction. My experience with filing bankruptcy under Gingold & Gingold's representation exceeded my expectations in a major way. They gave me such a peace of mind. I am very pleased with my decision of going with Gingold & Gingold to represent me when I filed Chapter 13 bankruptcy.

Julie T.

Wow! I am finally out of debt and can say that I am debt free after completing my chapter 7 bankruptcy case with Gingold and Gingold. Mr dangled was very knowledgeable and direct with regard to my debt situation. there were no surprises and the case went as I was advised. The staff was also very helpful whenever I had a question. I will definitely recommend them in the future to my friends.

Sherard W.

I cannot say enough about this law firm. From the initial consultation to our discharge, the entire office kept me updated with every step of the entire process. I came to the Gingold after a bad experience with another law firm. Ira and Jamie immediately began treating me like family through this experience. In the end, they assisted with eliminating many debts including my 2nd mortgage. I cannot say enough about the experience and knowledge that Ira brought to the table from the office visits to the court time. Thank you very much for helping me through this tough time. Thank you.

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