If a US company files for chapter 11.
What does it mean for its employees?
Chapter 11 refers to the section of the U.S. bankruptcy code designed for reorganization of a struggling but still at least notionally viable business.
When a company enters Chapter 11 there's not necessarily any immediate impact on employees. Occasionally a company in Chapter 11 gets bankruptcy court permission for retention incentives to hold onto key employees who are deemed critical to the company's reorganization and to preservation of creditor interests. On the other hand, part of the reorganization often involves workforce reductions and/or spinoffs of business units.
One possible negative factor is that a company entering Chapter 11 is often tempted to pull back from its international (non-U.S.) expansion efforts, especially if it's recent and/or unsuccessful -- to beat a retreat, similar to a retreating army that's losing a war. Sometimes that can work out well, for example if the company sells its Singapore-based unit to an acquirer that's looking to expand and grow in Singapore. Sometimes not. You presumably know your multinational/U.S. headquartered company, its industry and the dynamics within that industry, and its posture in Singapore.
Is there anything the employees should do?
Yes, I'd recommend the following:
1. Avoid incurring personal debt that should properly be company debt, such as unreimbursed "corporate credit card" charges. Get all your expense reports filed and keep filing them in timely fashion, if applicable. If you travel for the company then stay in the cheapest hotels, be flexible with air travel and find the cheapest fares, and otherwise spend as little as possible on business travel (and only when video conferencing isn't enough). Your company will appreciate that anyway, and you'll reduce your personal risk of being left as a big, unsecured creditor if something really bad happens.
2. File any outstanding claims for company-provided medical insurance reimbursement as quickly as possible, if applicable.
3. Discontinue any employee stock purchase plan participation if you have any. If you hold company shares you're likely already wiped out (for those). It's likely the company has already done this for you (ended the ESPP), but just make sure.
4. On the other hand, if you're participating in a U.S. 401(k) plan -- Chapter 11 is a U.S. bankruptcy code construction, so maybe you are -- then you should continue doing that, and try to collect as much company match as soon as you can, if applicable. Defined contribution retirement plans are well protected. Obviously don't buy your own company's stock shares via the 401(k), but you shouldn't have been doing that anyway.
5. Explore other job opportunities more actively and aggressively, especially if you are pessimistic about the company's prospects and your ability/position to make positive change.
6. Take a look at your emergency reserve fund and take steps now to bolster it if you can, if you feel it's too weak given your industry's overall job climate. Likewise, look at your household budget and keep discretionary expenses under tight control, especially if you are concerned about your industry's overall job climate.
7. Continue doing your job and doing it well, as long as you're getting paid exactly as promised and as long as you remain with the company. Act legally and ethically, and keep careful records (as you should be doing anyway), such as payslips, etc.
8. Pay attention to what your management says, and give it a fair assessment. That doesn't mean you have to trust or to believe management, but that also doesn't mean you should dismiss management's views out of hand. I suggest being "reasonably skeptical," meaning that you should respect not soothing words but concrete, positive deeds. For example, if there's a talented, "plugged in" manager (or two) you trust who leave(s) the company, you may wish to do the same.
9. If you are in a precarious immigration status in Singapore (i.e. not a citizen, PR, or a dependent of one working via a LOC) and wish to remain in Singapore (or at least try), there's probably not much you can do if you lose your job on short notice. However, one possibility available to some on Employment Passes is to apply for a Personalised Employment Pass (PEP). You get only one PEP per lifetime, if you get it, and it lasts for up to 3 years. The advantage with a PEP is that you can remain in Singapore for up to 6 months between jobs if necessary instead of the 30 days EP holders get.
Another possibility if you're married to a citizen, PR, or EP/PEP holder (with sufficient income), and if you currently have your own individual work permission, is to attempt to switch to a LTVP or DP (as applicable) with Letter of Consent (LOC)-based permission to work. If you're currently counted against your employer's foreigner worker quota then that switch would be helpful to your employer, if you can pull it off.
On the other hand, if your current employer is going to let anyone go first, it'll probably be "flex" workers such as temporary contractors and highly "replaceable" workers (in their view), especially if they're counting against foreign worker quotas and incurring levies. But the company might also choose to cull certain highly compensated employees. Those employees tend to be older, on average, but on the other hand employers in Singapore get some incentives to hang onto older citizen workers, in particular. Anyway, know your place in the company, basically -- including these status-related dynamics.
Are they allowed to withhold paying salaries, bonuses , etc...?
In most cases you are an "at will" employee, and the company can unilaterally decide, going forward, that you'll either be compensated differently (usually lower, but possibly with an approved retention incentive if you're deemed key) or let you go. That was true before Chapter 11, and that's still true after Chapter 11.
Very, very rarely a company fails to pay promised compensation for work already performed. But that's company suicide. Lose the workforce, and that's the end. I don't think this is a serious risk generically for Chapter 11 filings.
I think you should assume that promised future benefits that aren't vested -- aren't actually yours, or in a safe custodian's care as with 401(k) plans -- won't materialize. For example, if the company promised you a Rolex watch when you reach 20 years of service with the company, and you're now at 19.5 years and waiting for that Rolex watch, don't count on getting that Rolex. Don't bank on it, in other words. As another example, don't count on your company following through on its "promise" to move you to the U.S. next year for a 2 year international assignment. Indeed, it's likely your company will prematurely end any IAs they can as soon as they can, because they're "expensive."