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Helping good people through bad times

Bill could help protect workers who lose their jobs

For our first story to help Tennessee readers better understand the bankruptcy process, it's important to let them know what can happen to workers and retirees when a company has to close. When a company files for Chapter 11, it could mean many workers and retirees could lose wages and benefits, such as health insurance. This could lead to many personal bankruptcy filings.

One U.S. senator is attempting to change that, after mining workers told him they were worried about losing their pensions if the mine company they worked for went under. When a business seeks bankruptcy protection, it could attempt to get out from under its pension obligations.

Sen. Al Franken's bill would amend federal bankruptcy law by repealing a provision that only allows claims for wages and benefits to get priority when those wages and benefits are earned within 180 days of the company's bankruptcy filing. It would also double the maximum claim that employees and retirees can make for lost wages and benefits to $20,000.

Franken said "it's completely unfair" for retirees to only get some of their pension benefits when a company goes under. The federal government provides some protections for pensions, but Franken said the retirees would only get "30, 40 cents on the dollar."

Franken's bill would allow laid off employees and retirees to move to the front of the line for wages and benefits that were coming to them. Without the money, laid off workers may not be able to afford their own health insurance. That could lead to a massive pile of medical bills if an emergency or illness strikes.

Source: Wall Street Journal, "Sen. Al Franken Talks Bankruptcy," Jacqueline Palank, July 26, 2012

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Kenneth C. Rannick, P.C.
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