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With Bankruptcy Pending, ITT Tech Employee Lawsuits are Pushed to the Background

Posted on in Bankruptcy

With Bankruptcy Pending, ITT Tech Employee Lawsuits are Pushed to the Background

In 2016, ITT Technical Institute filed for Chapter 7 bankruptcy. This came after years of growing debt amid scrutiny of it and other for-profit colleges. The institution closed 136 of its campuses throughout the United States, leaving approximately 350,000 students unable to finish their degree programs. Following the filing, the media turned its attention to these students, many of whom have accrued significant debt while attending ITT Technical Institute.

But the students were not the only individuals impacted by the bankruptcy. In preparation for its liquidation, ITT Tech laid off employees without proper notice, leaving many of them “stranded” as well. The employees are seeking compensation for their lost wages and benefits, such as paid vacation days and 401(k) contributions for the 60-day period prior to laying them off that the institution was required to provide. But because of the bankruptcy proceeding, it is expected that the employees will remain in this position for the foreseeable future.

Employees' Rights Under Federal Law

Under federal law, employees slated for a mass layoff need to be given 60 days notice before their jobs cease to exist. According to an attorney for ITT Technical Institute, the school is preparing its defense against the employee lawsuits, but this is not its focus right now. Instead, it is focusing on the bankruptcy following its abrupt shutdown in September 2016. It filed for Chapter 7 bankruptcy in the US Bankruptcy Court for Southern Indiana, stating that its assets and liabilities are between $100 and $500 million and that it owes money to between 50,000 and 100,000 creditors.

High-Interest Student Loans and Subpar Programs Blamed for Shutdown

The United States Department of Education suspended lending to ITT Tech students, which prevented many potential new students from enrolling in the college. ITT Technical Institute is now blaming this suspension for its shutdown.

Since President Obama took office, the federal government has cracked down on for-profit colleges in the United States because allegedly, these institutions practice deceptive marketing that lures students into paying for subpar programs with high-interest loans. Students frequently default on these loans, destroying their credit and putting themselves into debt for degrees they could not finish or cannot use.

Work with an Experienced Elk Grove Bankruptcy Lawyer

Bankruptcy involves every member of a company, not just its CEO or its upper management team. If you are a business owner who is considering filing for bankruptcy, think about how it will affect all members of the team and what you will do to address their needs. Talk to an experienced bankruptcy lawyer to get a better sense of your employees' rights and what you can do while your bankruptcy is pending. To get started, contact a member of our team of bankruptcy lawyers at Newland & Newland, LLP. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Dwight Burdette)

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