Workers in Bankruptcy Procedure (rights, privileges and FOGASA)

In any Bankruptcy Procedure there is always a very sensitive question. It’s the workers. Workers in Bankruptcy Procedure (rights, privileges and FOGASA).

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What is a worker of a company in Bankruptcy Procedure entitled to?

Workers are entitled to receive, from the assets, the salaries accrued since the ruling of the Bankruptcy Procedure.

Likewise, those amounts in respect of salaries that have not been paid prior to the ruling of the Bankruptcy Procedure, will mostly be privileged. And therefore its payment will be preferential, with respect to the rest of the ordinary creditors.

What part of your salary is privileged?

Workers have two types of privileges in relation to the amounts owed to them by the debtor company:

1.- They will be granted a credit against the estate for unpaid wages. But only those that have been accrued 30 days before the ruling of the Bankruptcy Procedure. And the limit of double the minimum inter-professional wage (43.02 for the year 2013) also operates.

2.- A credit with general privilege will be recognized for the wages and indemnities pending payment. But only for those not recognized as stated in the previous point. And with a limit of three times the minimum inter-professional wage (64.53 for the year 2013)

What does FOGASA pay?

FOGASA guarantees that workers will receive their wages as well as the compensation for the pending payments (due to the Bankruptcy Procedure) of their dismissal.

The maximum amount to be paid by FOGASA with respect to wages is the result of multiplying twice the minimum daily inter-professional salary, with pro rata extra payments, by the number of days pending payment, with a maximum of one hundred and twenty days.

With regard to compensation, the maximum amount to be paid by FOGASA is one year’s salary, without the daily salary (which is the basis of the calculation) exceeding twice the minimum inter-professional salary, with extra pay.

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Effects of the Bankruptcy Procedure Declaration on Contracts

The most decisive effects of the declaration of the concussion for the continuity of the bankrupt are those that fall on the contracts.

And who is subrogated to this labor credit?

FOGASA pays the amounts pending payment by the debtor company to the workers with the above-mentioned limits. Then they are subrogated to their position in the Bankruptcy Procedure. And that subrogation takes place in the same amounts and with the same qualification that corresponds to the workers.

In companies with less than twenty-five workers, FOGASA will pay the compensation. The compensation is equivalent to 8 days per year of service, when the employment relationship is terminated in accordance with the provisions of Articles 51 and 52 of the Workers’ Statute (collective dismissals and for objective reasons). Also by virtue of Regulation of Employment Files within the Bankruptcy Procedure (Article 64 of the bankruptcy law), without said entity being subrogated, for said amounts, to the position of the worker in relation to the Bankruptcy Procedure. This is the only case in which the worker’s credit in the Bankruptcy Procedure disappears.

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