Opinion
No. 74 B 1088
February 11, 1980
Priorities — Wages — Child Support Deductions
A claim filed by the City of New York for payment representing deductions by the bankrupt-employer from its employee for child support payments is not a priority wage claim under Section 64a(2) of the Bankruptcy Act. The money is not due directly to the employee, as required under Section 64a(2), but rather, upon payment by the bankrupt to the City, the deduction becomes due to the employee's dependents. See Sec. 64(2) at ¶ 2626 and Sec. 507(a)(3) at ¶ 9029.
[Digest of Opinion]
The Family Court ordered that the bankrupt withhold and deduct from the wages of an employee of the bankrupt, a sum of money each week for eight weeks, for the support of the wage earner's dependents. In accordance with the Court order, a check was forwarded by the bankrupt to the creditor. In turn, the creditor issued its check in the same amount to the wage earner's spouse on behalf of the wage earner's dependents. Subsequently, the bankrupt's check was dishonored.In this action, the creditors has claimed that the amount due it is a priority wage claim pursuant to Section 64a(2) of the Bankruptcy Act. However, the court noted that the purpose of the priority is to enable employees, displaced by bankruptcy, to secure promptly, money directly due them in back wages, and thus alleviate some of the hardship of unemployment. In the instant case, the bankrupt's wage deduction from its employee had been ordered by the court and was not money directly due the wage earner in back wages. Instead, the duduction became due and owing to the wage earner's dependents upon payment by the bankrupt-employer of the wage deduction to the creditor.
Finding that the deduction was neither one owing to the wage earner, nor a payment coincident with the priority policy of the Act, the creditor's claim that the debt was a priority wage claim was denied.