As an Employee

• A person may run into a situation where a bankrupt business owes him money because he was an employee of the business. His employer may owe him back wages or retirement plan contributions. Businesses may even owe health insurance premiums for payment on the employee's behalf. A business may owe an employee contributions or other payments withheld from his paycheck, but has yet to pay on the employee's behalf. Many companies in this situation have employee advocates set up by the court to attempt to get the employee debt paid. The bankruptcy court will probably treat this debt as priority debt, meaning that it will be paid back in full before other debt.
  
  

Proof Of Claim

• If you are an employee or a vendor to whom a bankrupt business owes money, you need to file a proof of claim as soon as possible. A creditor can contact the bankruptcy court for specific instructions on how to do this. You must notify the court that you have a claim against the assets of the business, or the income of the business that needs payment. If the company is paying back its obligations through the Chapter 11 bankruptcy, the trustee will eventually pay you from the business profits. If the business is unable to make money, and must close, the claim will apply against the assets of the business in the Chapter 7 bankruptcy, where you will be in line with the other creditors for payments as the assets are sold.
  
  

Hire an Attorney

• If the business owes you a substantial amount of money, you may want to hire an attorney to protect your interests. The attorney can handle the proof of claim forms and file them correctly. An attorney can also advise you of your rights concerning collecting the debt. An employee may hire a lawyer on his own, or a group of employees may be able to get together and hire one attorney, splitting the costs between the group. It is a judgment call as to if a lawyer is worth the price.
  
  

Gift Cards and Warranties

• Other problems can stem from a business bankruptcy filing. Many businesses sell gift cards to customers, who in turn give them to people as gifts, so the recipient can purchase whatever he would like in the store. These gift cards represent an obligation to the individual holding them from the business and are covered under a bankruptcy as such. Often, a business that is going to continue to operate with a Chapter 11 bankruptcy will get permission from the court to honor the gift cards upon presentation. Extended warranties present a similar situation, but are generally honored as long as the company stays in business.