Many of my clients that are currently collecting workers’ compensation benefits become very concerned when they learn that their employer has filed for bankruptcy. Understandably, they fear that a bankrupt employer will not be able to continue paying their workers’ compensation benefits.
However, there is no reason to be alarmed if your employer has filed for bankruptcy while you are collecting workers’ compensation. This is because the insurance carrier will remain liable even after the employer has filed for bankruptcy. So long as the insurance company remains in operation, your benefits will continue as they have all along.
In circumstances where the insurance carrier who is paying the benefits files for bankruptcy, benefits are thereafter paid by the New York State Liquidation Bureau.
The bottom line is even if your employer files bankruptcy while you are out on workers’ compensation you likely have nothing to worry about because the insurance carrier will continue to be liable for your claim.