Labor Lawsuits & Bankruptcy In Elder Care Homes

This article will help you discover:

• Why more and more elder care homes are part of employee and labor lawsuits.
• One of the biggest advantages for companies of filing chapter 11 bankruptcy.
• What information you should share with your attorney if your company is filing for bankruptcy.

What Is The Current Situation Involving Nursing Homes And Other Elder Care Home Communities Being Sued By Employees?

An elder care home employs various workers who are often fed and allowed to sleep on site. In essence, they receive free accommodations and free food. However, they are not being paid for the entire time that they are there.

These workers argue, often successfully, that because they were on call even while sleeping, they’re entitled to payment for that time. This generates a claim not just for unpaid wages, but also for overtime wages.

A claim or lawsuit gets filed and reduced to judgment, and statutory penalties are included. The consequence is usually that the elder care facility cannot continue to operate and they often seek bankruptcy relief.

Why Has There Been A Recent Increase In Healthcare-Related Business Bankruptcy Filings?

It’s becoming more and more difficult for elder care facilities to find employees. The way they can sometimes get around the risks that these labor issues pose is to hire more people and put them on different shifts.

However, that’s not always practical because of the available worker pool. These employee and labor issues may be a key factor in the increased bankruptcy filings.

How Can Bankruptcy Help Debtors In The Elder Care Home Community Who Are Hit By Labor Lawsuits?

Lawsuits are stressful, regardless of whether they are against you individually, or against your business. If your elder care home has been hit by labor lawsuits, you may be wondering what your options are and whether bankruptcy is right for you.

How bankruptcy can help an elder care facility depends, in part, on the type of business. A business can be categorized as a sole proprietorship, a limited liability company (LLC), or a corporation. Any of these can benefit from bankruptcy filing.

In the case of an individual, they have the choice of filing a chapter 13 or a chapter 11 bankruptcy. In the case of an entity, such as a corporation or LLC, they would file a chapter 11 bankruptcy.

Both of these options allow them to continue to operate, while reducing the debt. Through bankruptcy, they can propose a feasible plan and have some exit at the end.

Can A Chapter 11 Bankruptcy Help Debtors In The Elder Care Home Community Who Are Financially Suffering From These Labor Lawsuits?

Chapter 11 is a very powerful tool for individuals, and especially for entities. One advantage to a chapter 11 bankruptcy is that part of your debt can be repaid over an extended period of time.

In chapter 13 bankruptcy, your repayment must be done over five years. In chapter 11, there is no such limit, and it could be repaid over 10 years. Part of the process involves calculating how much has to be repaid based on the liquidation value of the debtor’s assets, which would set a minimum threshold.

We would also look at the historic income of the debtor and their projected future income. This helps determine the minimum that has to be paid. If the amount that has to be repaid cannot be repaid within five years, Chapter 11 allows you to repay over a longer period of time with lower payments.

What Information Should We Give Our Chapter 11 Bankruptcy Attorney At Our Initial Meeting? How Will Your Firm Determine If An Elder Care Home Should File For Chapter 11 Bankruptcy?

When you consult with legal counsel regarding a potential bankruptcy, we collect all information related to your elder care home bankruptcy and your financial situation. During a consultation, you should be straightforward and disclose everything, because we can only help you when we have a truthful and complete picture.

First, we need to know the assets of your care home. Typically those assets are only furniture and fixtures, since the licensing itself is not transferable and therefore does not have value. Then we need to know whether the property is owned by you or is rented as the property may or may not have equity, which could be substantial.

We should also be informed of any other assets that your business may have, such as a vehicle. The vehicle could be registered under your corporate name or individual name, as long as it is used for business purposes.

Finally, we need to know all the debt you have. Frequently, we see that businesses have Small Business Administration (SBA) loans, which have Uniform Commercial Code (UCC-1) filings. These are liens against all personal property.

If real estate is involved, there may be a loan from a bank or a line of credit. There may also be unsecured debt, which in many cases are credit cards or labor claims, which sometimes have already been reduced to judgment.

For more information on Employee Lawsuits Against Nursing Homes, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (408) 295-5595 today.