• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Can we get this suit dismissed? A former employee sued us and then filed for bankruptcy

by on
in Discrimination and Harassment,Human Resources

Q. One of our former employees filed a discrimination lawsuit against the company. She subsequently filed for bankruptcy, but failed to include the pending lawsuit as an asset in the bankruptcy estate. She eventually obtained a bankruptcy discharge. Will the company now be able to have her discrimination lawsuit dismissed?

A. Most likely, no. Both federal and Florida courts have consistently held that, once a bankruptcy petition has been filed, a discrimination claim routinely becomes an asset of the bankruptcy estate. In turn, the bankruptcy trustee becomes the real party in interest in the discrimination lawsuit.

The fact that the discrimination claim might have inadvertently been left out of the bankruptcy proceeding before the discharge (e.g., because of a mistake by the employee, causing the trustee to be unaware of it) will not generally preclude it from the bankruptcy estate. Thus the trustee will be allowed to reopen the estate to prosecute the monetary claims, settle them for the benefit of the creditors or determine the discrimination was not of sufficient economic value and abandon it as an asset.

Under these circumstances, courts have not been inclined to involuntarily dismiss pending discrimination claims that are assets of a bankruptcy estate, even if a bankruptcy discharge is initially obtained before the lawsuit is included as an asset.


Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/9606/can-we-get-this-suit-dismissed-a-former-employee-sued-us-and-then-filed-for-bankruptcy "

Leave a Comment