Will I still be able to collect my vacation pay now that a new company bought us out?

Full question:

I am about to fill out a Proof of Claim form I received from the US Bankruptcy Court. What are my chances and all of the other 30 employees here, that we get our vacation days due us which we lost when another company bought us out?

• Category: Bankruptcy
• Date: 04/07/2025
• State: New Jersey

Answer:

It is difficult to respond to your question without knowing the kind of bankruptcy that was filed by your employer.

In Chapter 7 bankruptcy proceedings, a debtor is permitted to claim certain property of his estate as exempt from liquidation proceedings. However, the debtor's nonexempt assets are collected by a trustee representing the creditors. The trustee liquidates the assets and distributes the proceeds to the creditors. The debtor is then discharged from most debts. The term discharge basically means that the debt is deemed to be satisfied

The U.S. Bankruptcy Code allows the debtor to keep certain of his property and claim it as being exempt from the claims of creditors. This is known as exempt property. Generally, the debtor has a choice of exempt property as described under State law or exempt property as described under the Federal Bankruptcy law. The debtor will of course choose the law which is most favorable. Some general exemptions under federal law are:

Interest (equity) in a residence;

Interest in a motor vehicle;

Household furnishings;

Payments under a life insurance policy;

Payments of alimony and child support; and

Awards from personal injury actions.

The decree of the bankruptcy court which terminates the bankruptcy proceedings is generally a discharge that releases the debtor from most debts. However, a discharge does not release a debtor from certain debts. The following types of debts are not dischargeable: taxes; student loans; loans obtained by use of a false financial statement; alimony and child support; debts not listed on the schedule of liabilities; liability for willful and malicious injury to property; judgments based upon driving while intoxicated; and certain consumer debts for luxury goods.

Individuals, partnerships, and corporations in business may reorganize under the Chapter 11 of the Bankruptcy Code. This is referred to as a Chapter 11 Plan. With regard to business reorganization, the first step is to file a plan for the reorganization of the debtor. This plan divides ownership interest and debts into those that will be affected by the adoption of the plan and those that will not. It will specify what will be done to those interests and claims that are affected by the plan. The plan must be confirmed by the court. Once the plan is confirmed, the owners and creditors of the business have only the rights that are specified in the plan and cannot change their positions.