Ottawa Employment Lawyers for Employees Terminated Due to Employer Bankruptcy
When an employer enters bankruptcy, the employees are commonly the first to suffer consequences. Left without a job and often without immediate compensation, employees face the impact of a company bankruptcy immediately. Retaining a lawyer experienced in finding innovative compensation solutions for employees after their employer files for bankruptcy is key to mitigating the financial and emotional strain of the situation.
The employment lawyers at Champ & Associates have been working with employees of bankrupt companies for many years. They will find the most effective strategy to secure their client’s financial position, in the most efficient way possible. They will always prioritize the financial security of their clients above all else while they advocate for them through negotiation, litigation or alternative dispute methods.
Strength in Numbers
Champ & Associates represents many individual clients following an employer bankruptcy, but often represents groups of employees as well. When facing mass termination, there are considerable benefits to a number of employees retaining the same firm for representation. First and foremost, this enables multiple employees to work in tandem with their lawyer to determine the most effective strategy to move ahead. Similar to a class action, but without some of the onerous and time-consuming steps involved in that process, developing a unified strategy can be highly effective when facing a common opponent. Further, this approach often has the benefit of saving costs for each individual client, because the time spent on the matter is apportioned among each person, rather than falling to one specific client.
Paul Champ is experienced in managing cases this way. He has collectively represented upwards of 100 different clients against a single employer following a bankruptcy. His clients get the benefit of the firm’s vast experience dedicated advocacy on their behalf while enabling them to share resources and save expenses by joining forces with their former colleagues.
Employees as Creditors in a Company Bankruptcy
Employees are sometimes the last to know their employer is entering bankruptcy, and as a result are left scrambling to find a resolution quickly in a process they are likely unfamiliar with. Once a business has filed for bankruptcy, a list of known creditors must be determined and prioritized. Creditors include any individual or entity to whom the business owes money such as financial lenders, equipment vendors, landlords, Crown agencies and employees. The priority of those creditors will affect who is likely to be paid first from the business’s assets, and who may be shortchanged if the assets are insufficient to cover the debts owed.
Secured creditors rank first in priority. These are creditors with a claim secured by a lien against the debtor’s property. A typical secured creditor would be a financial lender with a secured loan or mortgage in their favour. After secured creditors, priority creditors follow, with unsecured creditors falling last in line.
Employee claims are not considered to be priority claims, meaning they will be compensated from the assets remaining after any secured creditors have been paid. This places them in a precarious position if there are little to no assets remaining. However, there are different strategies that our lawyers can advance to maximize recovery. As well, the federal government enacted a program in 2008 called the Wage Earner Protection Program (“WEPP”) to give employees a limited scope of special protections.
The Wage Earner Protection Program
The WEPP was designed to provide protections to employees in the event their employer goes bankrupt or enters into receivership under the Bankruptcy and Insolvency Act. Eligible employees may qualify for payments of up to seven times their maximum weekly insurable earnings under the Employment Insurance Act. Through the WEPP, employees are granted priority over secured creditors for the amount covered by the program. However, Champ & Associates regularly works with clients to secure additional compensation.
To be eligible for WEPP, there must be a trustee or receiver appointed to manage the situation, and the employee must be owed wages, vacation pay or other funds. The program is not available to former officers or directors of the employer company, or managers responsible for making financial decisions on behalf of the employer.
For Effective Representation After Job Loss Due to an Employer Bankruptcy, Contact Champ & Associates
Employees of a bankrupt company are often taken by surprise and may feel they have few options when it comes to financial recourse. The employment lawyers at Champ & Associates will work with employees individually or as a group in order to secure the financial compensation to which they are entitled. To discuss your matter in confidence, please contact the firm by telephone at 613-237-4740 or reach out online.