San Francisco, CA asked in Bankruptcy for Missouri

Q: Cash payout from a new employer during Chapter 7 - unusual circumstance - would like to know if it's protected.

April 20th of 2018, we filed for Chapter 7 bankruptcy. We disclosed the existence of unvested (no value) RSUs from my employer.

One for $2400, 0% vested , 100% vested May 2021.

One for $2400, 0% vested, with no vesting schedule. It’s single vest date is 9999, which means that the date is not set band performance need to be met.

Both have no current value.

In April, just before we filed, my company announced the sale our office to another company - on May 31st we will be terminated from the current.

Concerning RSUs my current employer stated:

"Your unvested stock options will be cancelled in the E*TRADE system as of your termination date from <current employer>."

New company announced that they will give a goodwill payout to those who lost equity in the form of cash sometime in June, as long as we are employeed at the time of the payout (June 15). It isn't equity or stock, it's just goodwill money to keep attrition low.

Is cash paid in June a pre-filing asset?

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1 Lawyer Answer
Timothy Denison
Timothy Denison
Answered
  • Bankruptcy Lawyer
  • Louisville, KY

A: Unless the new company announced the goodwill payout prior to your filing, it should be protected as it is a contingent post petition asset. If they announce prior to filing, it is a pre-petition asset and you’ll need to amend your schedules and claim an exemption for it. Consult your lawyer regarding both just to confirm.

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