Melissa Frank files a bankruptcy petition under Chapter 7. She owes $5,000 as wages to her four (4) employees. There is enough in her bankruptcy estate to pay her employees' claims in full, and to pay the expenses of the Chapter 7 Trustee, but there will be nothing left for the unsecured creditors.
Will each employee have to be paid less than what it is otherwise entitled to receive in order for there to be some money distributed to the general unsecured creditors?
