When a business files for protection under Chapter 11 bankruptcy, it must begin to pay off its debt by reorganizing or liquidating its assets. Oftentimes, both processes include terminating employees to reduce the business’s expenditures. As a result of these terminations, former employees might file a “class proof of claim” against the business to preserve any claims of unpaid wages or violations of federal law.
Whether a group may file a class proof of claim against a debtor in bankruptcy remains unclear. The Tenth Circuit has rejected the class proof of claim in bankruptcy. The remaining circuit courts that have addressed the issue agree that the class proof of claim exists within bankruptcy law. However, the concept’s lack of clarity is actually two-fold because courts within the latter group disagree about when a court may use its discretion to allow the class proof of claim.
This Comment argues that the class proof of claim exists in bankruptcy law. This Comment further proposes that all courts should use the same discretionary factors to determine when the class proof of claim is appropriate. Congress must modify the Bankruptcy Code to implement both. This Comment argues that modification will ensure the class proof’s uniform and consistent application, maintain fair balance between debtors and creditors, and achieve bankruptcy’s other goals.
Bankruptcy’s Class Act: Class Proofs of Claim in Chapter 11,
Dick. L. Rev.
Available at: https://ideas.dickinsonlaw.psu.edu/dlr/vol124/iss1/7