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Bankruptcy Claim against a former Employer for Severance not paid

Selma, NC |

I was laid off last year by a corporation that went bankrupt. Severance packages were not paid, but I was advised that I could file a claim as a debtor in bankruptcy court. I did so and just received an "Offer of Settlement". The settlement lists a Proposed Unsecured Claim Amount, Proposed Priority Claim Amount and Proposed Administrative Claim Amount. I am supposed to either accept or reject the offer. I know the difference in secured vs. unsecured debts and debtors. I also realize that the Administrative Claim is kept by the debtor to pay their expenses. I want to know what this entire offer means to me. Am I likely to receive the Priority Claim and have the Unsecured portion charged off? If I reject the offer, does the entire claim become unsecured and I'm likely to receive nothing?

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Attorney answers 1


The answers to your questions are likely explained in the disclosure statement, and in the settlement proposal, and you should review them again, to see what they say about your chances of being paid.

Besides the disclaimers, which usually provide a liquidation analysis, which may state that the case may fail if not reorganized, there are some general propositions that should help to explain this. The liquidation analysis should predict what happens if the plan is rejected, and may describe what happens if claims such as yours do not accept the plan.

In general, administrative claims get paid first, then it is more likely that priority claims get paid in full before unsecured claims. Whether any of these three classes get paid, should be disclosed.

You may benefit from conferring with an experienced bankruptcy attorney, to review this chapter 11 plan, and your rights.

General legal advice is offered for educational purposes only. A consultation with a qualified attorney is required to determine specific legal advice as to your situation and applicable law. We are a debt relief agency and we help people file for relief under the bankruptcy laws.

David B. Puryear Jr.

David B. Puryear Jr.


I agree with attorney Weston that this is a bankruptcy law question and not an employment law issue. You should consult with a bankruptcy attorney.

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