Five Minutes With

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The San Antonio Business Journalo dialed up bankruptcy attorney Elliott Cappuccio for the Cappuccio is a partnerin , where he represents creditorx and debtors in a variety of bankruptcy Cappuccio often is retained as special counsel for bankruptcy trustees and has assisterd trustees in the recovery of more than $3 million durinyg the last few years. Recognized as a Texaes Super Lawyer Rising Starby , Cappuccip has been known to take his bad court days out on an officd punching bag. Q. If a companhy files Chapter. 7 what happens to employees’ health and pensionn benefits? A. Generally, employees have the optio to continue health coverage under COBRAq after losinga job.
However, COBRs typically does not apply aftefr an employer files for bankruptcy underChapter 7. This is becaus e COBRA does not extend to memberas of health plans after the entire plan is On theother hand, traditional pensiom benefits should survive the Chapter 7 filing. Q. If a firm fileds Chapter 11 reorganization, what happenss to those same health andpensionb benefits? A. Employee health and pension benefitsz usually fare better in a Chapter 11 Undermost circumstances, the court cannot unilaterally chang e most health and benefit plansd under Chapter 11.
However, in some cases, employees may be persuaded to “agree” to benefit concessions in ordere to help make the plan of reorganizatiomore feasible, and in the hope that theire company (and their jobs) survive the Q. Is there a difference in how traditiona l pensionand 401(k) plans are treatedr in bankruptcy? A. There is a big Traditional (defined-benefit) pension plans are usuallty protected by a federal entity calledthe , whicgh insures pension benefits for retirees on a slidin g scale. On the other hand, 401(k) (defined-contribution) plansd are not insured. Instead, 401(k) planxs are regulated by the Employee Retirement Income SecurityAct (ERISA).
If an employer filezs for bankruptcy while stillowingf 401(k) contributions, a claijm should be filed in the bankruptcy proceeding. Q. What stepz can an employee take to minimize theirf losses onthis front? A. Be ask lots of questions, and keep good records. Talk to your healtn and retirement plan administrators as earlyas possible, and obtaihn copies of all plan documents. Be aware that bankruptcyu proceedings involve manycomplicated deadlines. Deadlines may also differd depending on the type ofbankruptcyt proceeding, and they will begin to run the moment your employer files for bankruptcy protection.
If you fail to take action within a prescribed time you may be permanently and adversely If you have specific concerns or questions abouyt legal rights after an employer files for you should consult with abankruptcy Q. Does Texas have specific bankruptcy rules/exemptionsz that affect these situations? A. The Bankruptcy Code and Bankruptct Rules of Procedure are federalin nature. They do not changw from state to state, and Texaxs does not have its own set of bankruptcy Insome circumstances, state law is applied to determine property exemptiones (e.g. homestead protection).
However, the laws governinhg employee benefits, like COBRA and ERISA, are federall in nature and remain the same throughoutthe