Chapter 11 Legal Question

ERJ-135

New Member
When a corp. shuts its doors and files chapter 11 bankruptcy, who is paid first once the legals get the action rolling? If the employee's were not paid for the last week, are they paid first, or are creditors first in line. Is vacation time paid/due if employee's did not take the vacation or is this lost?
 

Derg

Cap, Roci
Staff member
Chapter 11 is bankrupcy protection from creditors.

Chapter 7 is dissolving the company to pay creditors.

If ATA is chapter 7, employees and unsecured debtors (students) are very (!) far down the food chain for priority during payouts.

But I'm not an accounting major and I may be wrong.
 
G

Guest

Guest
Corporations file either chapter 11 or 13 bankruptcy. Chapter 7 is personal. Chapter 11 is pretty protection that enables you to restructure your business. Chapter 13 basically closing the doors, everyone screwed. But to answer the question, employees come first, then the creditors. However, a massive downsize usually accompanies chpater 11, so severance packages have to be reviewed by the bankruptcy judge.
 
G

Guest

Guest
you're right, I mixed them up in the post. Chapter 7 is closing doors, chapter 13 is personal. I better slow down next time.
 

JJPilot

Well-Known Member
The answer to your question, "doesn't matter anymore." Why? The former students have filed an involutary bankruptcy against the Williams' that puts them at the top of the list. Haulting even the criminal charges against them. They have 20 days to respond to the subpoena.
Take that Capt. Jim!
 
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