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What should you tell employees about your company’s bankruptcy?

On Behalf of | Jan 27, 2021 | Chapter 11 |

There are many things that you have to think about when your company is going to file for bankruptcy. One of these is how you will let your employees know what’s going on. While some companies don’t warn employees and just let them find out when the news breaks about the company, others do provide the employees with information before the filing occurs.

If you’re going to speak to your employees about the company’s bankruptcy, remember these tips:

Don’t make promises

Many commercial bankruptcy filings mean that payroll has to be cut. Employee pay and benefits are often the largest expense that companies have. If your company is going to remain open, which is possible in some bankruptcies, you might have to layoff workers. When you talk to the employees, don’t make any promises that you can’t keep. 

Remind them of their rights

There are several things that employees have the right to do if your company files for bankruptcy. For example, they can still file for unemployment benefits if you have to let them go because of the bankruptcy filing. 

Discuss what happens to their benefits

You should also be upfront about what will happen with their pension and health insurance. Many will be concerned about what happens to their health care coverage. Warning them if they will lose this is important since they can’t get coverage under COBRA if you stop all health plans. 

It might behoove you to talk to your attorney to find out how the filing will impact your employees as soon as possible. This can help you to provide accurate information to your crew when the time comes.