Is severance package part of my bankruptcy case
Client ready to file a bankruptcy case this week told me (incidentally) that he is planning to put in for a voluntary severance package from his employer about a week from now. He estimates that the amount (to be paid in July) will be about $100K for 20 years of union work. This is obviously too large to exempt and will become property of the estate. There is a lot of case law on whether such a severance package is pre or post petition property. It partly depends on whether or not a contractural obligation existed prepetition. You can also run into a "good faith" filing objection once the trustee finds out about the "windfall". I think there is a real question about whether or not this is property of the estate. He's been delaying filing so he could get a loan work out on his house (underwater) to benefit his ex-wife and get himself off title. If that debt goes away, I think he can take the package and pay down his unsecureds...depending on the actual pay out on the severance, he may be able to file next year if the need is still there.
