Company directors can be liable for wages & benefits

What happens to employees when a company goes bankrupt? Usually, a receiver is appointed, assets are frozen, and employees might end up getting a small percentage of what they’re owed for wages because secured creditors are always first in line to be paid out of the company’s assets. But there’s a section in the Ontario Business Corporations Act which makes directors personally liable for unpaid wages even in the face of their company going bankrupt. A recent story in the Law Times highlights a case where this section was used by a court to make directors pay employee wages and benefits after their construction company went bankrupt. A corporate structure can’t protect you from everything.