By:  LINDSEY O’NEILL, ESQ.

Has your employer filed for bankruptcy?  If so, you are probably wondering about what will happen to any medical coverage provided by your employer. 

Business bankruptcy can take one of two forms – reorganization or liquidation.  Under Chapter 11 of the Bankruptcy Code, the business will likely continue operations under the court’s protection while attempting to reorganize its financial affairs. A Chapter 11 bankruptcy may or may not affect your health plan. In a Chapter 7 bankruptcy, however, the company liquidates its assets to pay its creditors and ceases to exist. Therefore, if your employer filed for bankruptcy under Chapter 7, it is likely your health plans will be terminated.

You can learn more about your health care rights related to a job loss or your employer’s bankruptcy in LawInfo’s Free Legal Resource Center. Businesses facing bankruptcy should consult a qualified bankruptcy attorney to learn more about what options may be available to resolve the situation short of bankruptcy or for advice about how to best deal with going through reorganization or liquidation.