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This is a followup to What happens to contractors when employer goes bankrupt?.

When I signed with that company as a contractor, my contract promised me 10 days notice before letting me go. Presumably, if a situation had arisen where they said "We don't need you anymore; today's your last day", they would have given me some kind of severance (such as 10 days' pay).

Does the same apply because the company went bankrupt and suddenly told all its employees that it was their last day? Can I bring up this fact when the bankruptcy lawyers contact me?

NOTE: This is probably all hypothetical. It assumes a) By the time my group of creditors start getting our money, there will be enough to pay all I'm owed, instead of pennies on the dollar, and b) the settlement occurs sometime before the first manned flights to Mars.

  • And c) That there even is a settlement. When my employer went bust they simply stopped operating. There appears to have been no bankruptcy filing, the secured creditors seized their security and it was unlikely us employees could have gotten back the costs of taking legal action as we would have had to prove the owner's wife looted what was left and gone after her personally. – Loren Pechtel Aug 24 '18 at 2:25
  • According to your previous question, you were not an employee, you were a contractor. This is not clear from your current question and may make a significant difference. – ChrisInEdmonton Aug 24 '18 at 10:50
  • I thought when I said "my contract"... okay, fair point – Shawn V. Wilson Aug 25 '18 at 3:21
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Yes, in general if it was in your contract and there's no clause about one party ceasing to do do business that overrides it, then that 10 days pay in lieu of notice forms a debt to you alongside the unpaid invoices for work you actually did.

As you say, the chances of actually claiming it are low.

  • Most contacts for services I've seen have additional clauses that cover one party ceasing to do business that may override any notice period. – Eric Aug 25 '18 at 11:06
  • I don't think the contract had either a "going out of business" clause or an "in lieu of notice" clause. If i get bored, I'll go check. – Shawn V. Wilson Aug 26 '18 at 15:08

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