Considerations When You or an Employee of Your Company Files for Bankruptcy
If you have a job, or you own a company, there may be life events that happen to you that you would rather be kept secret. One of those things may be bankruptcy.
There certainly is no shame in bankruptcy—people do it all the time, and often, because of circumstances that they didn’t cause. But the fact remains that there is a stigma to bankruptcy and when it comes to your job or your company or your fellow managers, owners, or corporate officers, you may want that kept secret.
Will The Company or Co-Workers FInd Out?
The answer is that it depends.
If anybody you work with is a potential creditor, then they will be notified of the bankruptcy. So, let’s assume that you bought into ownership of a company, or shares of a company, through the company loaning your buy-in money to you and you are paying the company back.
The company is now a creditor and will be notified of the bankruptcy. The same holds true if some other officer of the company loaned you money or if you have any type of money that you have to pay back to the company.
Assuming that nobody in the company, nor the company itself, is a creditor to whom you owe money, then nobody in your company will be notified of your bankruptcy. However, like any court case, bankruptcies are public court records and anybody who knows how to do it could search and find your name and case, if they chose to do so.
If your company is garnishing your wages, say, for child support, or to pay back a judgement, they will also be notified, as the garnishment would be ordered to be stopped by the bankruptcy court.
What to Do if an Owner or Employee is in Bankruptcy
But other than these considerations, there is no legal requirement that anybody filing for bankruptcy tell their employer about it.
But the real question is what happens even if they do find out—or conversely, what do you do if you are a company and find out that one of your employees or other owners has filed for bankruptcy?
The answer is that you should do nothing, at least in the short term.
It is absolutely illegal for an employer to discriminate against an employee or other member of a company, because that person filed for bankruptcy. Any negative acts at work, even subtle ones, could be seen as punishment or retaliation or discrimination against the employee just because the employee exercised his or her legal right to file for bankruptcy.
Something else you should definitely not do, if an employee or fellow co worker is filing for bankruptcy, is try to collect on any money that person may owe to you or to the company. All collection activities by any creditor, formal or informal, must immediately cease once the bankruptcy case is filed.
If you feel that the person is trying to discharge a debt owed to you, you should find an attorney to discuss your remedies in bankruptcy court. You cannot collect on your debt outside of bankruptcy court, the way you normally could.
Call the West Palm Beach business litigation lawyers at Pike & Lustig today for help handling your employee legal matters, and any legal issue surrounding your business or company.
