Rise of the phoenix

Companies formed out of the ashes of bankruptcy may not be liable for statutory obligations of terminated employees
By Julia Falevich
|Canadian Employment Law Today|Last Updated: 12/02/2009

What happens when the principals of a bankrupt company create a new company, a so-called “phoenix rising,” to take over the assets and employees of the bankrupt? Is the new company liable to the former employees of the bankrupt in respect of employment standards obligations such as termination and severance pay? Are companies related to the “phoenix” also liable?