Bankruptcy (Non)Law: Who is Responsible if Workers Work Two Years Without Pay?

In the last two or three weeks, the media space has been flooded with news about how the last properties of a specific long-term bankruptcy (of a textile factory) have been sold, and from the sale price, the settlement of mortgage (so-called secured) creditors (mainly banks) and somewhat the state (mainly regarding debts owed for pension and health funds) is expected. Even during the so-called prime time (within the main news) of leading TV stations, a few former employees were given the opportunity to present their problem, of course from a human perspective, which often does not correspond with the legal one. Thus, we learned that some workers worked up to 24 months without pay and that their claims (only principal) are around fifty thousand kuna individually.

Everyone, without exception, stated that it would be fair for the state to waive its claims and allow workers to settle. Everyone, without exception, was outraged at the bankruptcy administrator, who avoided giving even approximate ratios of claims that would be settled and those (workers’) that would not be settled, even though they are legally in the first payment order, which unfortunately does not allow for priority over secured creditors. Workers were particularly outraged that the bankruptcy administrator would still be rewarded for his (successful or unsuccessful) work from the sale of assets that former employees somehow consider their own.

Ignorance Does Not Excuse

It is undisputed that everyone must be paid for their work, as well as that the employer (and not the worker) is responsible for finding work in the market, professionally contracting, and finally collecting for the work done. Everything here is completely clear, and we hope that even the greatest ignoramuses will not claim that there is something unknown to them here. What is less known to the general public (obviously also to workers) is that everyone is obliged (very clearly prescribed by the Law on Obligations) to contribute to minimizing damage, if it must exist.

Now the question arises as to how a worker who regularly comes to work and works, for example, 24 months without pay fulfilled that legal obligation. In our opinion, in no way, because as soon as the first month without pay passes, every worker should have a ‘red light’ go off and prompt them to seek advice from those more knowledgeable than themselves on what to do. Even if they do not do this after the first month, they should do it after two or three, not allowing the period in which the state guarantees workers whose employer ends up in bankruptcy the payment of three unpaid wages to expire. So, only three!

What to say and how to justify a worker who has lived and worked in capitalism as a system for over 30 years, except that it is an incredible combination of ignorance and naivety. And all this in the context of developed union protection, the fact that non-payment of wages is a criminal offense… Of course, no one can remain insensitive to the sad fate of workers, but there is also co-responsibility of the workers for it.

Creating Injustice

To prevent someone from mistakenly thinking that the state has set a good legal framework and is implementing good practices, it is necessary to clearly and argumentatively criticize that claim. It is true that the state has prescribed non-payment of wages as a criminal offense, but the list of those who have ended up in prison or otherwise been held accountable for it is tragicomic, just as tragicomic is everything that happens between owners, the state, creditors, and workers in the example of the former Shipbuilding Industry Split, which is now divided into ‘a small million’ subsidiary companies, and the state has been unable for months to determine whether the owner owes it or it owes him.

It is true that the state has not prescribed that at least part of workers’ claims has the status of a legal mortgage with absolute priority, so let the director and owner prove to banks (as the most common secured creditors) how much the properties are encumbered. It is true that authorized persons do not guarantee even for the minimal part of debts that lead to bankruptcy with personal property. It is true that it has not been ensured that the implementation of bankruptcies of companies that have employees in practice has absolute priority, and ironically, it is for so-called simple bankruptcies of companies allegedly without assets, which are then not even checked. And one could list so many more things that have not been done and why such absurd things happen for a legally regulated state that we would like to have.