Bankruptcies. Employee protection called into question !!! – EconomyMorning

In these times of worry and economic hardship it is reasonable to scrutinize legislative developments and try to estimate their impact on our daily lives.

While the partial unemployment scheme should be revised downwards, while unemployment compensation in general is also the subject of profound questioning, it is the turn of the “guarantee” not of deposits but wages in the event of a company’s bankruptcy to arouse the concern of employees, unions and those who follow public affairs with interest.

The protection of employees in the event of bankruptcy not threatened, assure the court administrators

Here is what this article says about Figaro.

I quote.

“The protection of employees in the event of bankruptcy is not threatened by the government’s draft order on the restructuring of companies,” said Christophe Brasse, president of the National Council of Judicial Administrators and Judicial Agents (CNAJMJ) on Wednesday.

This text, which aims to transpose the European directive “restructuring and insolvency”, “does not affect the rights of employees” and “guarantees the super-privilege they enjoy,” said Christophe Basse in an interview with AFP. It “clarifies” only an “extremely complex order of distribution of debts” currently in French law, he justified, thus refuting the criticisms of the Medef of the CFDT and FO.

These organizations have denounced a project that would ultimately threaten the current system of payment of wages during collective proceedings. During such a procedure, the payment of wages of an insolvent company is ensured by the wage guarantee scheme, the AGS, managed by the employers’ organizations.

Its financial resources come on the one hand from company contributions, and on the other hand from the sums recovered at the end of the procedures by the realization of the assets of the companies in liquidation, that is to say their sale.

As part of this achievement, the draft ordinance explicitly classifies the reimbursement of salary advances to the AGS after the payment of the fees of administrators and legal representatives. “We are very demanding that the super-privilege of the AGS not be demoted,” Medef deputy chairman Patrick Martin told AFP on Friday, highlighting the risk on the financial balance of the regime, and to term on its survival .

“It is not new that administrators and legal representatives are paid before the AGS”

That is true.

In reality, administrators and legal representatives are the first to pay for the smoldering remains of the beast company in bankruptcy. This is already the case, and this does not change in the new law.

What changes would be the place of other creditors and the wage guarantee fund would be downgraded by several places.

This means that in the long term, the risk would indeed be to see the fund deprived of a significant part of its resources.

This does not mean that wages would no longer be paid in the event of bankruptcy.

This means that the “solvency” of the fund would be called into question.

In such a case, there would be several solutions.

The first, because we are in France, and the simplest, would be to create a new tax, a new tax, or a new contribution of 0, x% of the amount of salaries to supplement the fund. You get the idea.

The second hypothesis is to completely privatize the system. Either you contribute to a salary guarantee fund or not … It would be a nice and juicy market.

The third hypothesis would be to nationalize this wage guarantee fund and transfer it to the national community. Not very credible when we will seek at all costs to reduce public spending.

Finally, the fourth hypothesis is that salaries would no longer be paid or only within the limit of the funds available, therefore partially.

As we are in France, and no problem can be solved by the creation of a new tax, I think that we can quickly expect to see the emergence of a new contribution on our salaries.

Stay tuned.

It is already too late, but all is not lost. Prepare yourselves !

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