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West Palm Beach Bankruptcy & Business Attorneys > > Chapter 11 Bankruptcy > What To Tell Your Employees About A Chapter 11 Bankruptcy

What To Tell Your Employees About A Chapter 11 Bankruptcy


When your business is considering Chapter 11 bankruptcy, your employees may have some knowledge about the business’s financial struggles, and rumors could be circulating around the office or the workplace. While you might not want to provide too much information to your employees about plans for a Chapter 11 bankruptcy, giving your employees certain information can actually help to improve morale and to quell any concerns about your company going out of business or closing permanently. Indeed, many employees do not understand that a Chapter 11 bankruptcy does not mean that the business is closing, and they may not realize that there are significant differences between Chapter 11 and Chapter 7 bankruptcy cases for businesses. In addition, you may be required to provide employees with information in some cases, especially in the event that you are considering layoffs.

You should work with an experienced West Palm Beach bankruptcy attorney to determine your rights and responsibilities as a business filing for Chapter 11 bankruptcy. In the meantime, the following are some things that may be helpful to discuss with employees at your business, or things you must tell employees leading up to a reorganization bankruptcy.

You Can Explain the Chapter 11 Bankruptcy Process 

For many employees, it can be an enormous relief to understand what is involved in a Chapter 11 bankruptcy case, and to learn about how this is a type of reorganization bankruptcy rather than a liquidation bankruptcy. During the Chapter 11 process, if you are not planning any layoffs, you can also inform your employees about these plans to improve morale in the workplace.

You Can Explain to Employees That Chapter 11 Bankruptcy Will Not Change How or When You Pay Wages 

When employees hear about a Chapter 11 bankruptcy case, they are often concerned that the bankruptcy process will impact how or when they receive wages. You can allay these concerns.

You May Have Obligations to Inform Employees About a Layoff Under the WARN Act 

If you are planning layoffs in conjunction with your Chapter 11 bankruptcy filing, you may be required to provide employees with a certain amount of notice under the federal Worker Adjustment and Retraining Notification Act, also known as the WARN Act. You may be required to provide advance notice of a layoff to employees under various circumstances. Generally speaking, full-time employees are protected by the WARN Act, and notice is typically required in situations where a particular number of employees will be terminated or laid off for a period of more than six months, or will have a reduction in hours for a period of six months or longer.

WARN Act requirements depend on the particulars of your business, so you should speak with an attorney about whether you must provide advance notice of layoffs to your employees. If you are not laying off employees and your reorganization bankruptcy will not involve layoffs or plant closures, you do not need to worry about the WARN Act.

Contact a West Palm Beach Bankruptcy Lawyer 

If you have any questions about your rights or responsibilities as an employer when your business is filing for Chapter 11 bankruptcy, you should seek advice from one of the experienced West Palm Beach Chapter 11 bankruptcy lawyers at Kelley Kaplan & Eller today.



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