A business declaring bankruptcy is different from an individual doing so. In addition to the procedures followed, a business owner will inform several parties about the decision, including their employees.
Telling your employees that the company is going bankrupt can be uncomfortable. But a few tips can help you. Here are three of them:
Be honest
Honesty is vital when talking to your employees about bankruptcy. Chances are they may have noticed a few changes that depict financial struggles or may have heard rumors in the office. Thus, avoiding the conversation may be unwise. They may be worried about their future – being honest can ease this.
But you don’t need to give them too much information, especially about matters you are not well-informed about yet.
Pick the right time
While you should inform your employees about the company’s struggles earlier (before rumors get out of hand), you should be sure about your decision first. You should also delay the conversation when a large company event or a national holiday is around the corner.
Explain the process
You should explain your chosen bankruptcy process to your employees to help them know what to expect. For example, if you want to file a Chapter 11 bankruptcy or “reorganization,” most of your employees may remain at work. Accordingly, they may not need to worry about being laid off.
You should also tell them about your plans, as some may be laid off. Tell them how you will pay owed wages and benefits and so on.
When your employees understand the bankruptcy process, they may have a more manageable experience.
If your company has financial problems, legal guidance can help you protect yourself and your employees.