What Should I do When my Employer Files for Bankruptcy?

We all like to think that we have job security but the reality is, there is always the chance that your employer could file for bankruptcy.

Even if you have been with the company for a long time and you are an asset to the business, you are still vulnerable if the company is in a difficult financial position.

Unfortunately, employees are not usually told about the financial state of a business, especially when it is struggling, so bankruptcy can come as a bit of a shock.

One day everything seems normal, and the next you’re being called into a meeting with a licensed insolvency trustee that informs everybody that the company has filed for bankruptcy.

The company is shutting down and your job is gone, along with the financial security that it brings.

The first question that everybody asks in this situation is, what should I do when my employer files for bankruptcy?

You will be wondering what happens to your wages or any vacation pay that you are owed, and whether you will get severance pay or not.

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Wage Earner Protection Program

The good news is, you may be eligible for a payment through the Wage Earner Protection Program (WEPP).

The WEPP came into effect on the 7th July 2008 and it is designed to offer relief to employees when their employer declares bankruptcy.

If you qualify, you will be paid any outstanding wages, up to a certain amount.

Any employee that is terminated as a result of the bankruptcy is entitled to wages, which include their salary, vacation pay, commissions, and compensation for services rendered.

This extends to a six month period before the date that your employer filed for bankruptcy, so any money that you are owed from before this period will not be paid.

You are also entitled to severance and, in some cases, termination pay.

How Do You Make A Claim?

Payments through the WEPP will not be made automatically and anybody that is eligible must make a claim first.

It is important that you meet all of the necessary requirements and follow the process to the letter.

Initially, you do not need to do anything because the responsibility falls to the trustee that is handling the bankruptcy of your employer.

It is down to them to register the bankruptcy with the WEPP so they are aware that there are employees that may potentially make a claim.

Once they have registered the bankruptcy, they are then responsible for going through company records and determining who is eligible and how much they are owed.

After these requirements have been met, the trustee will then advise you on the steps that you need to take to make your claim with the WEPP.

This is a two-step process:


  • Firstly, the trustee will give you a form, called a Proof of Claim Form, which you will need to fill out and return to them before you are eligible to make your claim with the WEPP. The quicker you do this, the quicker your claim will be processed and you can get the money that you are owed.
  • After the Proof of Claim Form has been filed, the trustee will register all of your information with the WEPP and let you know when you can file your claim directly with the WEPP.


It is so important that you take the advice of the trustee and follow their instructions carefully.

If you do not meet all of your obligations, you will not be able to file a claim with the WEPP.

Before you file your claim, ask the trustee for a copy of all of the information that they have shared with the WEPP.

You need to calculate how much you believe that you are owed and then compare this to the figures that the trustee has given to the WEPP.

If you think that they have made a mistake, discuss this with the trustee and have them explain their calculations to them.

In some cases, they may make alterations if their figures are incorrect and you are entitled to more.

After checking that the amounts are correct and filing your Proof of Claim Form, you can now apply directly to the WEPP.

All applications must be made within 56 days of whichever of these dates is the most recent:


  • The date that your employer filed for bankruptcy.
  • The date that your employment was terminated or the date that you resigned or retired.
  • The date that the receiver terminated your bankruptcy.


If you do not meet this deadline, you will need to provide an explanation in your application and if that explanation is not satisfactory, it could affect the outcome.

If the trustee is not meeting their obligations, you need to chase them up so you can make sure that your application is filed on time.

Any money that you are paid through the WEPP is considered earnings, so if you are in receipt of Employment Insurance benefits, you are required to report it.

It also has an impact on any other income-tested benefits and if you do not declare it, you may be breaking the law.

If you are wondering, what should I do when my employer files for bankruptcy, it’s important not to panic.

The WEPP is there to ensure that you are paid what you are owed, but you need to make sure that you file your application in time and follow the process to the letter.

If you need any advice about what you should do or you have questions about the application, we are here to advise you.

You may also be worried about your own financial situation, especially if you have a lot of debts.

A sudden job loss can put you in a very difficult position and you may be unable to meet your financial obligations each month.

When this happens, debt can quickly spiral out of control and you may need to consider different debt relief options.

We can give you all of the expert advice that you need to manage your debt issues, so get in touch today if you are concerned.

You can reach us by phone or fill out an evaluation form and we will get back to you.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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