Overview of Limitations on Employee Compensation in Bankruptcy

Recognizing the potential consequences, companies in Chapter 11 bankruptcy often try to reduce employee uncertainty by seeking authority from the bankruptcy court. The Bankruptcy Code, however, imposes a variety of limitations on the ability of a debtor-employer to provide certain types of compensation and benefits to "insiders," a term that is broadly defined in the Bankruptcy Code.

16 minute readDecember 02, 2019 at 12:40 AM
By
Carl E. Black
Jonathan Noble Edel
Overview of Limitations on Employee Compensation in Bankruptcy

The filing of a bankruptcy case by a company creates substantial uncertainty for its employees. This uncertainty can translate into employee departures, lack of focus on the business, and diminution

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