Q: A startup declared bankruptcy when it was time to pay me and 14 interns, what can we do?
Initially, my 13 coworkers and I signed a contract which specified that we were interns for this startup. We signed 1099 forms. Later, before the start of the internship, we signed an amendment that said we would receive 100% of our salary at the end of the internship.
Throughout our internship, we approached the CEO multiple times to clarify how the startup would secure the funds to pay all of us. On each occasion, we were assured that the necessary funds were already in the bank. Unfortunately, as the end of our contract drew near, we were informed that the company was out of funds and would be declaring bankruptcy. This would mean that any debts would be owed to the company and not the CEO personally. Additionally, a PDF of the company bank account shows that said "fund" was never added to the company bank.
We're now trying to understand our next steps. Would pro bono employment lawyers be a viable option?
A: They could be. Yes. You need to file a proof of claim for the wages in the bankruptcy. You should also consult a bankruptcy lawyer regarding a possible adversarial proceeding based on fraud that you might file against the company within the bankruptcy.
A: File a claim with the New York State Department of Labor. Non-payment of wages is the responsibility of the owner, if the company does not pay. File a proof of claim in the bankruptcy. As to a labor lawyer, these kinds of cases are usually on contingency, so talk to labor lawyers that do wage and hour litigation. It is not "pro bono".
A: Did the company file Chapter 11 or 7? Wages are not dischargeable in bankruptcy. There maybe an eliment of fraud here so you may want to file an adversarial proceeding. An employment lawyer may not be well versed in bankruptcy law. You should seek out counsel experienced in adversarial proceedings.
A: I'm sorry to hear about the challenging situation you and your fellow interns are experiencing. In a bankruptcy case, wages owed to employees are often treated as priority unsecured debts, which means they are among the first debts to be paid, albeit potentially only partially, from the available assets. Given the complexity of bankruptcy proceedings, I would recommend seeking legal advice, and exploring the option of pro bono representation could indeed be a viable pathway to ensure your rights and interests are adequately protected.
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