Add Comment Question: Does employer pay severance when closed up for bankruptcy? Answer: A bankrupt employer has an obligation to provide termination pay. That said, collecting the money may be difficult. Employees are unsecured creditors and their debts come secondary to the government and secured creditors such as banks. Your Comment * Your Email * Your Name * Your City Note, your name, city and email is not displayed on the website. It is used to notify you that we have approved your comment.