A Bankruptcy Lawyer’s Blog

Bankruptcy and Retired Employees

When an organization or a factory declares bankruptcy, it means that it doesn’t have funds to pay up the investors and keep running their business. This can happen for a large array of circumstances, such as concurrence with other industries from the same division, general recession in economy, poor administration, peculation and other issues.

When a company declares bankruptcy, there are two different alternatives: purse liquidation, if the company is completely lost and there is no way to salvaging it or file for reorganization, trying to stay alive by cutting costs and attracting new investors. Either way it is very likely to pension plans are terminated. If this happens, a federal insurance agency called Pension Benefit Guaranty Corporation takes the company place and continues paying the pensions to the ex-worker. Unfortunately, there are some conditions such as the maximum annual payment for 2008 is $54,000 so those who used to receive a higher value have their earnings decreased.

Besides the current employees, a company bankruptcy also affects the already retired workers who draw company benefits. A survey realized by the Kaiser Family Foundation on 2,700 retired workers from a company who declared bankruptcy. 50% of the participants have postponed their doctor visits, 53% have skipped taking medications or split their doses and 29% went without need medical care. Those data reflect the influence of the lack of benefits; people get scared of not having money to afford their costs with medication and their family health.

Many times, people on their 60′s are placed on a fragile situation: the money and benefits, such as pension and health care plan they used to receive from the company they worked a long time of their lives disappear. On this age, it is very hard to look for and get a new job for many factors. However, there are some ways to raise money from streams that they never dreamed about, one just have to search properly.

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