Payment of vacation owed and severance pay after being layed-off when Co. filed for Chapter 11

My company, Aerolineas Argentinas, filed for Chapter 11. A week later I, together with some other employees got lay-off (until the company resumes operation).
1) Shouldn't I get paid for my vacation time (3 weeks from last year & 3 weeks accumulated from this year)
2)The company has a severance plan. I should be entitled to that too.
3) How do I file for both?

1 answer  |  asked Jul 23, 2001 4:58 PM [EST]  |  applies to New York

Answers (1)

David M. Lira
Getting Paid When Your Employer FIled for Bankruptcy

Generally speaking, once you have earned pay or some benefit, it can't be taken away from you that easily. So, in most situations, you are entiled to the 3 weeks vacation from last year. The vacation from this year might be a little more questionable. It all depends on how your company usually handles vacation pay. (The problem is that I don't know how you company allows you to accrue vacation time.) You may not have as yet earned the full 3 weeks of vacation for this year.

I am assuming that the severance plan is set up as a welfare or benefit plan under ERISA. You would know if it is covered by ERISA if the company distributes a "summary plan description" of the severance plan. If you ask, you should be able to get a copy of this "SPD." It might be a good idea for you to get a copy of the SPD. It might be needed to determine your precise rights, even in bankruptcy.

When there is a bankruptcy, a lot of the usual rules just go out the window. I am not a bankruptcy attorney, and, if you want a more enlightened answer, you might want to consult a bankruptcy attorney. I am particularly unsure about the status of the severance plan when there is a bankruptcy involved. When it comes to your vacation pay, you don't necessarily lose it, but it can be tied up for a period of time. The good news is that it should receive special treatment because I believe vacation pay would be a priority claim under the bankruptcy laws.

In any case, sooner or later, you should be hearing from the bankruptcy court. At that point, the court will instruct you on how to file a claim.

posted by David M. Lira  |  Jul 24, 2001 12:20 PM [EST]

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