[Direct answer]In the Beijing area, if a company goes bankrupt and fails to pay salaries, workers' claims enjoy priority in bankruptcy liquidation. According to Article 113 of the Enterprise Bankruptcy Law of the People's Republic of China, after the bankruptcy estate is used to pay off bankruptcy expenses and common benefit debts in priority, the first order of repayment is the wages owed to workers and the medical, disability compensation, and funeral expenses owed to them. The basic pension and medical insurance premiums owed to workers that should be deposited into their personal accounts, as well as the compensation payments required by laws and administrative regulations to be paid to workers, are also included. However, it should be noted that creditors with security rights (exclusionary rights) over specific assets have priority over workers' claims for repayment of those assets. Workers should promptly declare their claims to the administrator. For more details, please refer to the relevant provisions.Labor arbitration and legal services for work-related injury compensation.

I. Problem background and typical scenarios

After a company encounters operational difficulties and enters bankruptcy proceedings, employees are most concerned about whether they can recover their unpaid wages. Typical scenarios include: the company being ordered into bankruptcy, with employees' wages and social insurance contributions being long overdue; employees simultaneously claiming economic compensation and unpaid annual leave wages; the company having machinery, equipment, and factory buildings that have been mortgaged to banks, with employees worried about being "preempted" by secured creditors; and some employees holding effective arbitration awards or court judgments who want to directly apply for enforcement but find that the company has already entered bankruptcy. These situations all involve the bankruptcy liquidation order and the positioning of employees' claims. The processing channels are different from regular wage claims, and compensation must be collected through bankruptcy proceedings.

II. Key points of contention

The disputes focus on the following aspects: First, the order of repayment. Although workers' claims are listed in the first order, they rank after bankruptcy expenses and common benefit debts, and give way to secured claims; Second, the scope of workers' claims. Wages, personal parts of social insurance, and statutory compensation are priority scopes, while whether ordinary social insurance pooled funds and third-party advance payments should be included is often disputed; Third, arrears in wages and funding. Some regions have emergency working capital for arrears in wages or government funding mechanisms, but these are advance payments with the right to recover; Fourth, abnormal income of executives. The bankruptcy law allows adjusting the performance bonuses of directors and executives into ordinary claims. The confirmation and distribution of relevant claims can be referred to for reference.Creditor-debtor relations and enforcement case services.

III. Professional analysis by Henglue Lawyers

Based on Henglu Lawyer's practical observations in handling labor disputes and creditor cases, the key to bankruptcy wage arrears cases lies in "timely declaration + accurate definition of creditor's rights". Firstly, employees should actively declare their claims within the creditor's rights declaration period announced by the court, and submit proofs such as labor contracts, pay slips, attendance records, termination notices, and social insurance records to determine the amount of wage arrears, so as to avoid rights being reduced due to late declaration. Secondly, the definition of creditor's rights affects the actual compensation. Wages, social insurance deposited into personal accounts, and statutory compensation are given priority for repayment, but some items claimed by workers (such as ordinary pooled social insurance and reimbursement funds) may not be recognized as priority creditor's rights. Thirdly, pay attention to the creditor's table and distribution plan prepared by the administrator, and may file a lawsuit for creditor's rights confirmation against objections according to law. Wage arrears of employers before entering bankruptcy can also be fixed through arbitration before bankruptcy acceptance, and relevant contracts and employment compliance can be consulted for advice.Business and contract dispute services for enterprises.

IV. Practical suggestions and legal basis

In terms of legal basis, Article 113 of the Enterprise Bankruptcy Law of the People's Republic of China (effective June 1, 2007) clearly stipulates the order of repayment of bankruptcy assets: first, repay the bankruptcy expenses and common benefit debts; then, repay the workers' claims, social insurance and taxes in turn; and finally, repay ordinary bankruptcy claims. Articles 31 to 33 of the law regulate bankruptcy revocation and invalid acts to prevent malicious transfer of property before bankruptcy to harm workers' interests; Article 32 regulates individual repayment revocation. Practical suggestions: pay attention to the announcements of the accepting court and the administrator, check and correct the claims on schedule; collect a full set of evidence of unpaid wages; report clues of malicious transfer of assets to the administrator and claim revocation; and understand the local policies on ensuring payment of unpaid wages. For more protection paths, please visitLabor arbitration and legal services for work-related injury compensation.

5. Henglu Law Firm's Reminder

Bankruptcy-related unpaid wages are not a "total loss". The law guarantees workers' basic labor rights through the first order of repayment, but the amount of compensation is subject to multiple factors such as the company's asset size, the establishment of guarantees, and the costs of repayment. Workers should abandon the binary expectation of "either getting it all or getting nothing", and instead focus on the procedures of creditor confirmation and distribution. Timely paying attention to announcements, accurately filing claims, and raising objections according to the law are the keys to converting paper-based priority rights into actual repayment.

For more guidance on protecting labor rights and creditor's rights, please visitBeijing Henglue Law FirmAndSpecial services and other case services.

VI. Frequently Asked Questions

Q1: The company has gone bankrupt. Can I still directly apply for enforcement of the judgment of victory I obtained earlier?

Generally, it cannot be executed independently. After the court accepts the bankruptcy application, the individual enforcement procedures for the debtor's property shall be suspended, and the creditor shall declare his claims to the administrator and be compensated through the distribution of the bankruptcy estate. If your wage claims have been confirmed by an arbitration award or judgment, you should still declare them to the administrator within the creditor's declaration period and submit the effective documents as evidence. After the administrator reviews and confirms them, they will be included in the creditor's list. Attempting to bypass the bankruptcy procedure and enforce individual assets in advance may be deemed as an invalid individual settlement. It is recommended to pay close attention to the announcements of the court and the administrator and submit your claims on time.

Q2: If the company has pledged its assets to the bank, will workers' wages still be paid as a priority?

Regarding the mortgaged property itself, the secured creditor's rights take precedence over the workers' claims. According to the Enterprise Bankruptcy Law, the rights holders who enjoy security rights over the debtor's specific property shall be paid off first with respect to such property; after the security is realized, the secured creditor's rights shall be repaid first, and the remaining portion shall then be included in the general bankruptcy estate for distribution in accordance with the order of workers' claims and other creditors. However, the company's other unsecured assets shall still be repaid in accordance with the statutory order, and workers' claims shall be ranked first among unsecured assets. Therefore, workers are not completely disadvantaged, but they give way to "security rights established on specific property". Workers should pay attention to the company's asset structure and distinguish between secured and unsecured assets to judge their repayment prospects respectively.

Q3: Do employees need to declare their own creditor's rights, or will the administrator list them out automatically?

The administrator is responsible for investigating and listing the employees' claims and making them public. Generally, employees do not need to actively declare their claims like ordinary creditors; however, employees should still actively check whether the amounts recorded in the list are accurate, and raise objections and request corrections if they find omissions or understatements. For claims that the administrator does not have information about or for which the amount is in dispute, employees should still provide evidence to explain the situation. If no objections are raised during the public announcement period, the employees' claims recorded in the creditor list will generally be directly confirmed; if there are objections, they can be resolved through the administrator's review or by initiating creditor confirmation litigation. Actively paying attention to announcements and preserving evidence of unpaid wages is a prerequisite for ensuring compensation.

Q4: When it comes to bankruptcy liquidation, which should be paid first, the workers' claims or the taxes?

Employees' claims take precedence over taxes. According to Article 113 of the Enterprise Bankruptcy Law, the order of repayment is as follows: after bankruptcy expenses and joint-benefit debts, the first priority is employees' wages, personal social insurance contributions, and statutory compensation; the second priority is unpaid social insurance contributions and taxes; and the third priority is ordinary bankruptcy claims. Therefore, employees' claims are repaid before taxes. However, it should be emphasized again that this order only applies to unsecured general bankruptcy assets. Specific claims secured by property still take precedence over employees' claims for repayment of the secured assets. Employees should comprehensively assess whether the company's assets are pledged or not.

Q5: If the company suddenly transfers its assets before going bankrupt, can the employees' unpaid wages still be recovered?

It's possible, but the right of revocation must be exercised in accordance with the law. According to Articles 31 and 32 of the Enterprise Bankruptcy Law, the administrator has the right to request the court to revoke and recover the property and include it in the bankruptcy estate for distribution to creditors, including employees, if the debtor has transferred property without compensation, conducted transactions at obviously unreasonable prices, or prematurely repaid debts that were not yet due within one year before the acceptance of the bankruptcy application, or has paid off individual creditors even though the debtor already met the bankruptcy criteria within six months before the acceptance of the bankruptcy application. Employees who discover such clues should provide evidence and clues to the administrator to promote the administrator to exercise the right of revocation; if it involves fictitious debts or the recognition of untrue debts, they can also claim the invalidity of the act. Recovering the property will increase the available distribution pool and indirectly increase the likelihood of employees receiving compensation.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific cases.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Labor arbitration legal services·Beijing Henglue Law Firm