Question

NationsWay, Inc., a trucking company, declared bankruptcy in 2016, and as a result had all of it’s contract obligations discharged.. The employees of the company then sued the president of NationsWay, contending she should be held personally liable for the unpaid wages and benefits. They based their cause of action on the fact that they had been hired by the president and that she had given them assurances that they had a permanent job. Is the president individually liable for the wages of the corporation's former employees?

An answer should show recognition of the issues presented by the question, an understanding of the material facts, the principles of law applicable, and the reasoning relied upon by you to support your conclusion.

Facts:

Issue:

Rule:

Application:

Conclusion:

Answer 1

Facts: The company, NationsWay declared bankruptcy in 2016

Issue: Issue is relating to unpaid wages and other employment benefits.The president of NationsWay was demanded upaid wages and employment benefits.

Rule: The rule states the corporation, NationsWay is only liable to pay to its employees. The corporation is a distinct entity from the President or any other officer. Further, post declration of the bankruptcy, the liquidator would make the payments of all the claims against the company. The quantum of such payment would depend upon the value realised on selling the assets of the company.Post declaration of bankruptcy, all claims against the company are supposed to be raised to the official liquidator.

Application: In this case, the employees cannot raise the claim against the president of NationsWay as the President is also the employee of the corporation and she is under no obligation to pay the claims of the employees.

Conclusion: It is advisable to the employees to make a claim to the liquidator of NationsWay for unpaid dues.