What Happens If Your Employer Goes Bankrupt While on H-1B: Protecting Your Status
Your sponsoring employer filed for bankruptcy or shut down suddenly. Here's what happens to your H-1B status and your options.
Quick Answer
When H-1B employer goes bankrupt or shuts down, your employment ends and 60-day grace period begins immediately. You cannot work during grace period but can stay in U.S. to find new H-1B sponsor, transfer visa, or change status. If employer files Chapter 11 bankruptcy (reorganization) and continues operating, your job may continue. Get employment termination documentation for records and start job search immediately.
Key Takeaways
Bankruptcy doesn't automatically terminate H-1B, employment termination does
Chapter 7 (liquidation) = employment ends immediately
Chapter 11 (reorganization) = company may continue, job may survive
60-day grace period starts when employment officially ends
Cannot work during grace period, only arrange next steps
Get termination letter and save all immigration documents
Key Takeaways
Bankruptcy doesn't automatically terminate H-1B, employment termination does
Chapter 7 (liquidation) = employment ends immediately
Chapter 11 (reorganization) = company may continue, job may survive
60-day grace period starts when employment officially ends
Cannot work during grace period, only arrange next steps
Get termination letter and save all immigration documents
Table of Content
Types of Bankruptcy
Chapter 7 (Liquidation): Company closes completely. All employees terminated. Your employment ends immediately, triggering 60-day grace period. No possibility of continuing with same employer.
Chapter 11 (Reorganization): Company restructures debt while continuing operations. Your job may or may not survive depending on restructuring plan. If you keep working, H-1B status continues. If laid off during restructuring, same 60-day grace period applies.
Chapter 13: For individuals, not companies. Doesn't apply to your employer situation.
Immediate Steps When Employer Fails
Day 1-3:
Confirm employment status (terminated vs continuing)
Request termination letter with exact end date
Request copies of all H-1B documents (I-797, LCA, petition)
Print I-94 from cbp.gov/i94
Understand your severance package if any
Notify immigration attorney
Day 4-60:
Job search aggressively for H-1B transfer opportunity
Apply to 10-20 positions daily
Network with recruiters who understand H-1B
Consider change of status if can't find H-1B sponsor
File H-1B transfer before day 60 if new employer found
H-1B Transfer Process
New employer can file H-1B transfer petition during your grace period. Once filed (not approved, just filed), you're in lawful pending status and can remain in U.S. while petition processes. You cannot work until transfer is approved.
Timeline | Status | Can Work? |
|---|---|---|
Days 1-59 | Grace period | No |
Day 45 | New employer files transfer | No (but legally pending) |
Days 45-75 | Awaiting approval | No |
Day 75 | Transfer approved | Yes - start immediately |
Premium processing ($2,805) gets 15-day decision, allowing faster work start.
Getting Documents from Bankrupt Employer
When company shuts down, getting immigration documents becomes difficult. HR department may be gone. Servers may be offline. Be proactive.
Documents to secure:
I-797 approval notice (original if possible)
LCA (Labor Condition Application)
H-1B petition copy
Employment verification letter
Pay stubs showing employment history
W-2s and tax documents
If company has legal counsel handling bankruptcy, contact them for document requests. Bankruptcy trustee may have access to employee records.
What If You Can't Find New Sponsor
If 60 days pass without H-1B transfer filed, options include changing to B-2 tourist status (file I-539 before grace period ends), changing to F-1 student status (requires school acceptance), leaving U.S. and job searching from abroad, or exploring O-1 or other visa categories.
Change of status applications filed before grace period ends put you in "lawful pending status" - can stay while USCIS processes even if grace period expires.
Impact on Green Card Process
If you had pending PERM or I-140 with bankrupt employer, status depends on stage:
PERM pending: Terminates. New employer must start new PERM.
I-140 filed but not approved: May be withdrawn by employer during bankruptcy. If approved before withdrawal, priority date preserved.
I-140 approved: Priority date yours forever (after 180 days from approval). Can port to new employer's petition.
I-485 pending 180+ days: AC21 portability applies. Can transfer to new employer in same/similar role without restarting.
Severance and Final Pay
Federal WARN Act requires 60-day notice for mass layoffs. If company fails to provide notice, you may be entitled to 60 days' pay. File claim with bankruptcy court as unsecured creditor for unpaid wages and severance.
Many employees of bankrupt companies receive partial or no payment. Don't count on severance - focus on finding new sponsor quickly.
Warning Signs of Employer Trouble
Watch for late paychecks, mass layoffs/hiring freezes, executives departing suddenly, company unable to pay vendors/bills, rumors of acquisition or shutdown, and declining business performance.
If you notice warning signs, start confidential job search before crisis hits.
Types of Bankruptcy
Chapter 7 (Liquidation): Company closes completely. All employees terminated. Your employment ends immediately, triggering 60-day grace period. No possibility of continuing with same employer.
Chapter 11 (Reorganization): Company restructures debt while continuing operations. Your job may or may not survive depending on restructuring plan. If you keep working, H-1B status continues. If laid off during restructuring, same 60-day grace period applies.
Chapter 13: For individuals, not companies. Doesn't apply to your employer situation.
Immediate Steps When Employer Fails
Day 1-3:
Confirm employment status (terminated vs continuing)
Request termination letter with exact end date
Request copies of all H-1B documents (I-797, LCA, petition)
Print I-94 from cbp.gov/i94
Understand your severance package if any
Notify immigration attorney
Day 4-60:
Job search aggressively for H-1B transfer opportunity
Apply to 10-20 positions daily
Network with recruiters who understand H-1B
Consider change of status if can't find H-1B sponsor
File H-1B transfer before day 60 if new employer found
H-1B Transfer Process
New employer can file H-1B transfer petition during your grace period. Once filed (not approved, just filed), you're in lawful pending status and can remain in U.S. while petition processes. You cannot work until transfer is approved.
Timeline | Status | Can Work? |
|---|---|---|
Days 1-59 | Grace period | No |
Day 45 | New employer files transfer | No (but legally pending) |
Days 45-75 | Awaiting approval | No |
Day 75 | Transfer approved | Yes - start immediately |
Premium processing ($2,805) gets 15-day decision, allowing faster work start.
Getting Documents from Bankrupt Employer
When company shuts down, getting immigration documents becomes difficult. HR department may be gone. Servers may be offline. Be proactive.
Documents to secure:
I-797 approval notice (original if possible)
LCA (Labor Condition Application)
H-1B petition copy
Employment verification letter
Pay stubs showing employment history
W-2s and tax documents
If company has legal counsel handling bankruptcy, contact them for document requests. Bankruptcy trustee may have access to employee records.
What If You Can't Find New Sponsor
If 60 days pass without H-1B transfer filed, options include changing to B-2 tourist status (file I-539 before grace period ends), changing to F-1 student status (requires school acceptance), leaving U.S. and job searching from abroad, or exploring O-1 or other visa categories.
Change of status applications filed before grace period ends put you in "lawful pending status" - can stay while USCIS processes even if grace period expires.
Impact on Green Card Process
If you had pending PERM or I-140 with bankrupt employer, status depends on stage:
PERM pending: Terminates. New employer must start new PERM.
I-140 filed but not approved: May be withdrawn by employer during bankruptcy. If approved before withdrawal, priority date preserved.
I-140 approved: Priority date yours forever (after 180 days from approval). Can port to new employer's petition.
I-485 pending 180+ days: AC21 portability applies. Can transfer to new employer in same/similar role without restarting.
Severance and Final Pay
Federal WARN Act requires 60-day notice for mass layoffs. If company fails to provide notice, you may be entitled to 60 days' pay. File claim with bankruptcy court as unsecured creditor for unpaid wages and severance.
Many employees of bankrupt companies receive partial or no payment. Don't count on severance - focus on finding new sponsor quickly.
Warning Signs of Employer Trouble
Watch for late paychecks, mass layoffs/hiring freezes, executives departing suddenly, company unable to pay vendors/bills, rumors of acquisition or shutdown, and declining business performance.
If you notice warning signs, start confidential job search before crisis hits.
Does bankruptcy automatically end my H-1B?
No. H-1B continues as long as employment continues. Chapter 11 bankruptcy may allow operations to continue. Only employment termination triggers grace period.
How long is grace period after layoff?
60 calendar days or until I-94 expires, whichever is shorter.
Can new employer file transfer during grace period?
Yes. File before day 60 to maintain lawful presence while transfer processes.
What happens to my green card if employer goes bankrupt?
Depends on stage. PERM terminates. I-140 may survive if approved. I-485 pending 180+ days has AC21 portability.
Can I get my immigration documents from bankrupt employer?
Contact bankruptcy trustee or legal counsel handling bankruptcy. They may have access to employee records.
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