Managing a business is no piece of cake. As a business owner, you have to oversee the daily operations, and you are in charge of making sure that everything flows smoothly. But as an employer, you will have more responsibilities on your plate.
First of all, you have people that depend on you to provide them with ample wages and benefits in exchange for the work that they do for you. Second, your employees all hinge on the fact that your business is in good condition and not on the verge of failure. Lastly, if your business is on the rocks, your employees have the right to know what’s going on.
There may come a time when you will feel that filing for bankruptcy can be your only saving grace when dealing with a financial crisis. And that’s not something to be afraid of. In fact, if anything, it can be a way for you to refocus and reorganize your company without the pressure of creditors breathing down your neck.
Many companies have gone down this road and successfully managed to create new strategies that propelled their businesses towards the future. Filing for bankruptcy is not an end-all situation; rather, it’s a relief from unwarranted distress and a solution to bide for more time.
How Will Your Employees Fit into All These Plans?
When debtors, which in this case is you, file for bankruptcy, they may also include a petition in the court to use the first-day wage and benefits motion for their employees. Companies in the midst of bankruptcy can usually maintain their operations, provided that their employees are still compensated.
It will be impossible for a business to resume operations without its employees, so filing this motion is crucial to creating a smooth transition into bankruptcy. The first-day wage and benefits motion will allow you to compensate your employees with their pre-bankruptcy salaries as well as the additional benefits.
Right to payment is an integral part of maintaining the workforce, especially because unpaid and underpaid employees will not be inclined to come to work. But there are times when the uncertainty that comes with bankruptcy can no longer pacify employees just by compensation.
In such cases, key employee incentive plans can be put into action. Instead of paying employees to remain with the debtors, these incentive plans are created to reward employees for their work performance. While the former situation is retentive in nature, the latter creates an environment that pays for the value of work provided.
How Do You Begin Filing for Bankruptcy?
As always, the best way to go about dealing with legal matters is by consulting an expert in the field. For your situation, it can be wise to require the assistance of a bankruptcy lawyer who can guide you through the process and leave no stone unturned.
Before you even begin filing for bankruptcy, you should cover all the grounds that can be affected by this decision. A responsible business owner will know that their decisions will create a ripple effect on their company, their products or services, their customers, and their employees.
One wrong decision and all the lives in your hands may suffer the consequences. Without a good strategy to handle this financial crisis, you can be facing legal actions taken against you by your own employees because they were treated unjustly.
Matters such as wage claims, violations for not giving ample notice to the workforce, and laying off employees without severance pays are only some situations you can be facing if you fail to acknowledge their importance before filing for bankruptcy.
Business Operations in the Midst of Bankruptcy
There’s a big possibility that you can maintain business operations even during bankruptcy, all of which is highly dependent on the type of bankruptcy that you will file. There are different types of bankruptcy, such as Chapter 7, 11, and 13.
Knowing which type can be more beneficial to your business and your employees is vital, especially since all these types have various requirements and eligibility. If you want to continue operating without a hitch, then you might need to consider restructuring your entire organization.
This can include downsizing your workforce and only retaining the essential employees. Of course, that would mean that you have provided enough time for your employees to be notified of the possibility of layoffs and have secured back pays or severance pays to compensate them correctly.
You have to remember that bankruptcies are always on a case-to-case basis. Just because one strategy worked for a company in the past doesn’t automatically mean that it will work for yours too. So before you do anything drastic that can be potentially life-changing, consult an attorney for their advice.