My Employer Went Out of Business — What Happens to My Workers' Comp Case in Connecticut?

By the Law Offices of James F. Aspell, P.C. | Connecticut Workers' Compensation Attorneys

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You were injured on the job. You filed your workers' compensation claim. And then — without warning — you found out your employer closed its doors. Went bankrupt. Shut down for good.

Now what?

This is one of the most frightening situations an injured worker in Connecticut can face. You're already dealing with pain, medical appointments, lost wages, and the stress of recovery. The last thing you need is to wonder whether the company's collapse is going to take your workers' compensation benefits down with it.

Here's the short answer: in most cases, it won't. But the full picture is more complicated — and knowing the details could make a critical difference in protecting your rights.

At the Law Offices of James F. Aspell, P.C., we have spent decades helping injured Connecticut workers navigate exactly these kinds of situations. Whether your employer shut down last month or two years ago, whether you're just starting your claim or fighting for benefits you've already been awarded, this guide is written for you.

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Table of Contents

1. Why Your Workers' Comp Claim Doesn't Die When Your Employer Does
2. The Role of Workers' Compensation Insurance in Connecticut
3. What Happens When Your Employer Files for Bankruptcy?
4. What If Your Employer Was Uninsured? Connecticut's Second Injury Fund
5. The Biggest Mistakes Injured Workers Make After an Employer Closes
6. What Benefits Are You Still Entitled To?
7. Recent Changes to Connecticut Workers' Compensation Law You Need to Know (2025)
8. How to Find Out Who Is Responsible for Paying Your Claim
9. Why You Need an Experienced Connecticut Workers' Comp Attorney Right Now
10. Frequently Asked Questions
11. Contact the Law Offices of James F. Aspell, P.C. — Free Consultation

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1. Why Your Workers' Comp Claim Doesn't Die When Your Employer Does

When most people think about workers' compensation, they assume the money comes directly from their employer. So when that employer disappears, it's natural to assume the money disappears too.

That's not how Connecticut workers' compensation actually works.

Under the Connecticut Workers' Compensation Act (Chapter 568 of the Connecticut General Statutes), virtually every employer in the state — including businesses with just one employee — is required by law to carry workers' compensation insurance. This insurance is the mechanism that actually pays your benefits. Your employer's name is on the policy, but it is the insurance company that holds the money and the legal obligation to pay your claim.

Think of it this way: when your employer goes out of business, they lose their business license, their lease, their employees, and their assets. But they cannot make their workers' compensation insurance policy disappear. That policy — and the obligations attached to it — legally survive the company's closure.

This is a fundamental protection built into Connecticut law, and it exists precisely to prevent injured workers from being left without recourse when the company that injured them no longer exists.

The key takeaway: If your employer carried workers' compensation insurance (as the law requires), the insurance company is still legally responsible for your claim even after the business closes.

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2. The Role of Workers' Compensation Insurance in Connecticut

To fully understand your rights, it helps to understand how the Connecticut workers' compensation system is structured.

Connecticut law requires all employers — regardless of size — to carry workers' compensation coverage. This requirement applies to both full-time and part-time employees. The Connecticut Workers' Compensation Commission (WCC) administers the system and oversees all claims through a network of district offices across the state.

When you are injured at work and file a claim, here is what is supposed to happen:

Step 1 — Report the Injury. You report your injury to your employer. Legally, you have up to one year from the date of injury to provide written notice, but waiting creates delays and evidentiary problems. Report immediately whenever possible.

Step 2 — Employer Notifies Insurer. Your employer is required to immediately notify their workers' compensation insurance carrier, who then files documentation with the Workers' Compensation Commission.

Step 3 — Insurer Reviews the Claim. The insurance company has 28 days to review your claim and decide whether to accept or contest it.

Step 4 — Benefits Begin. If your claim is accepted, wage replacement benefits begin. Note that there is a three-day waiting period before wage replacement kicks in, though this is waived if your disability lasts more than seven days.

Step 5 — Ongoing Medical and Wage Benefits. The insurer continues to pay for approved medical treatment and wage replacement while your claim remains open.

Here is the critical point: when your employer closes, your claim file still exists at the Workers' Compensation Commission. The insurance company still exists. Their legal obligation to pay your benefits continues regardless of whether the employer is open for business. The policy was purchased, the premiums were paid (or should have been), and the coverage is in force.

Nothing about your employer going bankrupt or closing its doors automatically terminates the insurance company's obligation to you.

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3. What Happens When Your Employer Files for Bankruptcy?

Bankruptcy adds a layer of complexity that every injured Connecticut worker should understand. The specific outcome depends on what type of bankruptcy was filed and whether your employer was insured.

Chapter 7 Bankruptcy (Liquidation)

In a Chapter 7 bankruptcy, the company is completely dissolved. Its assets are liquidated and distributed to creditors. The business ceases to exist entirely.

For your workers' compensation claim, this generally does not matter if the employer had insurance. The insurance policy continues independent of the bankruptcy. The insurance company must continue honoring its obligations under Connecticut law. Your claim against the insurance carrier is not a claim against the bankrupt estate — it is a claim against the insurer.

Chapter 11 Bankruptcy (Reorganization)

In a Chapter 11, the business attempts to restructure and continue operating. Workers' compensation obligations are typically treated as ongoing obligations that must be maintained during the reorganization process.

When Bankruptcy Complicates Things

Issues arise in two circumstances:

Scenario A — The employer was self-insured. Some large Connecticut employers are permitted to "self-insure," meaning they cover workers' compensation claims from their own assets rather than purchasing an insurance policy. If a self-insured employer goes bankrupt, your claim against them becomes a creditor claim in the bankruptcy proceeding. This is more complicated and is exactly the kind of situation where you need an experienced Connecticut workers' compensation attorney immediately.

Scenario B — The insurance company itself becomes insolvent. This is rare, but if the insurer that covered your employer becomes financially troubled, you may stop receiving benefits. Connecticut has protections in place for this scenario through the Connecticut Insurance Guaranty Association (CIGA), which provides a safety net for policyholders when insurers become insolvent.

In either of these more complicated scenarios, the stakes are high and the legal landscape is complex. Do not try to navigate this alone.

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4. What If Your Employer Was Uninsured? Connecticut's Second Injury Fund

Here is where things get more serious — and where many injured workers feel truly abandoned.

What if your employer never carried workers' compensation insurance in the first place? It happens. Despite the legal requirement, some employers — particularly small businesses, fly-by-night operations, or contractors working in gray areas — fail to maintain coverage.

If you were injured working for an uninsured employer in Connecticut, you are not without recourse. The Connecticut Second Injury Fund steps in to cover workers' compensation claims when an employer has failed to carry required insurance and cannot pay benefits.

The Second Injury Fund is a state-administered program financed by assessments on all Connecticut employers and insurers. Its purpose includes providing benefits to workers whose employers are uninsured or who otherwise fail to pay court-awarded benefits.

How the Second Injury Fund Works for Uninsured Employer Claims

Under Connecticut General Statutes Section 31-355 and related regulations, if your employer was uninsured and fails to pay workers' compensation benefits that have been awarded, the Second Injury Fund is authorized to step in and pay those benefits directly to you.

The process works like this:

• A formal hearing must be held before a Workers' Compensation Commissioner.
• The Second Injury Fund, the Attorney General's Office, and the Workers' Compensation Commission are all notified and may participate.
• If a finding and award is issued against the employer, the Fund can make direct payment to the injured worker.

Additionally, Connecticut law imposes serious criminal and civil penalties on employers who deliberately fail to carry workers' compensation insurance. Failing to carry required coverage can result in civil fines of up to $50,000 and, in cases of deliberate violation, criminal prosecution as a Class D felony, punishable by up to five years in prison.

What This Means for You

Even if your former employer was uninsured and has now closed or vanished, you may still have a valid path to workers' compensation benefits through the Second Injury Fund. This is not a simple process — it requires formal hearings, legal filings, and navigating a state bureaucracy. But it is a path, and injured workers have successfully pursued it.

The attorneys at the Law Offices of James F. Aspell, P.C. have experience pursuing claims against uninsured employers through the Second Injury Fund. If you are in this situation, call us. We will tell you exactly where you stand.

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5. The Biggest Mistakes Injured Workers Make After an Employer Closes

When an employer suddenly goes out of business, injured workers are often shocked and panicked. That panic can lead to costly mistakes. Here are the ones we see most often:

Mistake #1: Assuming Your Benefits Have Automatically Stopped

Benefits do not automatically stop when your employer closes. If you have an accepted claim and an active insurance carrier, your benefits should continue. However, insurance companies sometimes use the confusion surrounding a business closure as an opportunity to quietly stop paying — hoping you won't notice or won't know to push back. Monitor your payments closely and contact an attorney the moment anything changes.

Mistake #2: Failing to Document Everything

With your employer gone, paper trails become even more important. Keep copies of every medical record, every payment you have received, every letter from the insurance company, and every communication with the Workers' Compensation Commission. If records were kept at your employer's office, they may be difficult or impossible to retrieve once the business closes.

Mistake #3: Missing Deadlines

Connecticut workers' compensation law has strict deadlines. You generally have one year from the date of injury to file a workers' compensation claim, and three years from the date of first manifestation for occupational disease claims. The closure of your employer does not pause or extend these deadlines. If you have not yet filed your claim, do so immediately.

Mistake #4: Accepting an Early Settlement Without Legal Advice

When an employer closes or a company enters bankruptcy, insurance companies sometimes push for quick settlements. They may offer you a lump sum to close out your claim. While settlements can be appropriate in the right circumstances, accepting one without fully understanding your rights — especially if you are still treating or have ongoing disabilities — can cost you tens of thousands of dollars in future benefits. Never accept a settlement without consulting with an experienced Connecticut workers' compensation attorney first.

Mistake #5: Not Reporting a Change in Employer Status to Your Attorney or the WCC

If you already have an open workers' compensation claim and your employer closes, this is a material change in your case that your attorney and potentially the Workers' Compensation Commission need to know about. Don't assume the system will update automatically.

Mistake #6: Giving Up

This is perhaps the most heartbreaking mistake of all. Many injured workers, especially those who are already struggling with pain and financial stress, simply give up when they hear the employer is gone. They assume the system won't help them and stop pursuing their rights. This is wrong. Connecticut law was designed with precisely these circumstances in mind. You have rights, and they can be enforced.

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6. What Benefits Are You Still Entitled To?

Your employer going out of business does not reduce or eliminate the workers' compensation benefits you are entitled to under Connecticut law. Those benefits include:

Medical Benefits

All reasonable and necessary medical treatment related to your work injury should continue to be covered by the workers' compensation insurance carrier. This includes:

• Physician and specialist visits
• Diagnostic testing (MRIs, X-rays, etc.)
• Physical therapy and rehabilitation
• Surgery, if required
• Prescription medications
• Medical equipment (braces, crutches, etc.)
• Transportation costs to and from medical appointments (at the federal reimbursement rate)

Your employer closing does not give the insurance company the right to deny necessary medical care.

Temporary Total Disability (TTD) Benefits

If you are completely unable to work due to your work injury, you may be entitled to temporary total disability benefits, which are paid at approximately 75% of your after-tax average weekly wage for the 52 weeks before your injury. These benefits continue for as long as your total disability lasts.

Temporary Partial Disability (TPD) Benefits

If you can work but your injury has limited you to lighter duty or fewer hours, you may be entitled to temporary partial disability benefits to make up the wage difference.

Important 2025 Update: Connecticut House Bill 6863, signed into law on May 20, 2025 and effective July 1, 2025, made significant changes to the interplay between temporary partial disability and permanent partial disability benefits. Administrative law judges are now required to convert temporary disability benefits to permanent partial disability benefits once a worker reaches Maximum Medical Improvement (MMI). Benefits for workers who cannot return to their usual job due to permanent partial disability are capped at 60 weeks and require participation in a vocational rehabilitation program. See Section 7 below for more details.

Permanent Partial Disability (PPD) Benefits

If your work injury results in permanent impairment to a specific body part, you are entitled to permanent partial disability benefits. These are paid for a set number of weeks depending on the affected body part and the degree of permanent disability.

Permanent Total Disability (PTD) Benefits

If your injuries are so severe that you are permanently and totally unable to work in any capacity, you may be entitled to permanent total disability benefits for as long as the disability lasts.

Vocational Rehabilitation

If your injury prevents you from returning to your prior occupation, you may be entitled to vocational rehabilitation services to help you prepare for a new line of work.

Death Benefits

In the tragic event that a work injury results in death, the worker's dependents are entitled to workers' compensation death benefits. Connecticut's 2025 legislation also expanded eligibility for death benefits to include parents of deceased employees when no spouse or dependents survive.

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7. Recent Changes to Connecticut Workers' Compensation Law You Need to Know (2025)

Connecticut workers' compensation law changed significantly in 2025, and these changes can directly affect your case.

Connecticut House Bill 6863 (Signed May 20, 2025; Effective July 1, 2025)

This legislation reversed a significant Connecticut Supreme Court ruling from March 2025 (Gardner v. Department of Mental Health & Addiction Services) and made the following key changes:

Mandatory PPD at MMI: Once a treating physician determines that an injured worker has reached Maximum Medical Improvement — meaning the condition has stabilized and is unlikely to significantly improve — Administrative Law Judges must now award Permanent Partial Disability (PPD) benefits. They no longer have discretion to continue Temporary Partial Disability (TPD) benefits beyond that point.

60-Week Cap on PPD for Workers Who Cannot Return to Their Usual Job: Workers who cannot return to their pre-injury job due to permanent partial disability are now subject to a 60-week cap on those PPD benefits. This cap applies only to cases where the worker cannot return to their usual employment.

Vocational Rehabilitation Requirement: Workers subject to the 60-week PPD cap must participate in a vocational rehabilitation program.

Expanded Death Benefits: Parents of deceased employees are now eligible for death benefits when the worker left no surviving spouse or dependents.

Retroactive Application: These changes apply to claims filed on or after July 1, 1993, and took effect July 1, 2025.

These changes make it more important than ever to have experienced legal representation. The transition from temporary to permanent disability benefits — and the timing of that transition — can have enormous financial implications. An attorney who understands this new legal landscape can make sure the timing works in your favor and that you receive every dollar you're entitled to.

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8. How to Find Out Who Is Responsible for Paying Your Claim

When an employer closes, one of the first practical questions injured workers face is: who do I contact to make sure my benefits keep coming?

Here are the steps to take:

Step 1: Contact the Connecticut Workers' Compensation Commission

The WCC maintains records of all workers' compensation claims filed in Connecticut. The Commission has eight district offices across the state. Your case should be assigned to a district office based on where your injury occurred or where your employer was located. Contact the appropriate district office to confirm the current status of your claim and to obtain the name of the insurance carrier responsible for it.

Connecticut Workers' Compensation Commission contact information is available at portal.ct.gov/WCC.

Step 2: Review Your Claims Documentation

If your employer has given you any paperwork related to your workers' compensation claim, it should include the name of the workers' compensation insurance carrier and a claim number. Review all documents you received.

Step 3: Check the National Council on Compensation Insurance (NCCI)

If you cannot locate the insurance carrier through the above channels, your Connecticut workers' compensation attorney can run checks through industry databases to identify the carrier associated with your former employer's policy.

Step 4: Contact the Connecticut Insurance Department

If the insurance company itself cannot be located, or if you believe the insurance company may have become insolvent, the Connecticut Insurance Department can provide guidance and information about state guarantee fund protections.

Step 5: Contact an Attorney

If you are having any difficulty identifying the responsible insurance carrier, or if the carrier is disputing its responsibility, do not wait. Contact the Law Offices of James F. Aspell, P.C. We handle exactly these situations every day.

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9. Why You Need an Experienced Connecticut Workers' Comp Attorney Right Now

Workers' compensation is never simple. When your employer goes out of business, it becomes even more complicated. Insurance companies don't always act in good faith when the employer is no longer around to advocate for the business relationship. And the combination of a closed employer, potential bankruptcy proceedings, possible uninsured status, and recent changes to Connecticut law creates a legal environment where the wrong move can cost you years of benefits.

Here is what the right attorney does for you in this situation:

Identifies the responsible insurance carrier — and holds them accountable if they try to deny or delay your claim.

Navigates bankruptcy proceedings — if your employer's assets are involved in a bankruptcy case, an attorney can protect your interests in those proceedings.

Pursues Second Injury Fund claims — if your employer was uninsured, an attorney can pursue every available avenue to get you the benefits you're owed.

Protects you from bad settlements — insurance companies know that scared, confused, unrepresented injured workers sometimes accept far less than they deserve.

Keeps your claim moving — workers' compensation cases can stall, especially when the employer is no longer present. An attorney ensures deadlines are met, hearings are scheduled, and your case doesn't fall through the cracks.

Fights retaliation claims — if you suspect your employer targeted you for termination because you filed a workers' compensation claim, an attorney can pursue additional remedies under Connecticut law, including potential civil claims for wrongful termination.

Maximizes your benefits — from medical treatment to temporary disability, permanent disability ratings, and vocational rehabilitation, an attorney ensures you receive everything the law entitles you to.

At the Law Offices of James F. Aspell, P.C., you pay nothing unless we win. Our fee comes as a percentage of the benefits we recover for you — so there is no financial risk to calling us. Our free consultation is genuinely free, with no obligation and no pressure.

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10. Frequently Asked Questions

Q: My employer went bankrupt six months ago and my workers' comp checks just stopped. What do I do?

A: Contact the Workers' Compensation Commission immediately and, more importantly, contact a Connecticut workers' compensation attorney today. Stopping benefits without proper notice and without the Commissioner's approval is a serious violation. You may be entitled to additional penalties and attorney's fees as a result.

Q: My employer never had workers' compensation insurance. Do I have any rights?

A: Yes. Connecticut's Second Injury Fund can provide benefits when an employer is uninsured. Additionally, if your employer deliberately failed to carry insurance, they committed a Class D felony under Connecticut law. An uninsured employer also potentially loses certain liability protections, opening up additional avenues for recovery.

Q: Can I sue my former employer if they went out of business?

A: Workers' compensation is generally the exclusive remedy against an employer for a work injury. However, there are exceptions: if your employer's willful or serious misconduct caused your injury, if they were uninsured, or if they fired you because you filed a workers' comp claim, additional legal remedies may be available.

Q: My injury was serious and I may never be able to return to my old job. Does my employer going out of business affect my permanent disability claim?

A: No. Your right to permanent disability benefits is determined by your medical condition and Connecticut law, not by whether your employer is still in business. The insurance carrier remains obligated.

Q: How long do I have to file a workers' compensation claim in Connecticut?

A: Generally, you have one year from the date of your injury to file a claim. For occupational diseases, you have three years from the date of first manifestation of the disease. These deadlines are firm. If you are approaching either deadline, contact us immediately.

Q: What if the workers' compensation insurance company is also having financial trouble?

A: Connecticut insurance regulations and the Connecticut Insurance Guaranty Association (CIGA) provide protections in the event of insurer insolvency. An experienced attorney can help you navigate those protections.

Q: Will receiving workers' comp affect my ability to collect unemployment?

A: If you are totally disabled due to your work injury, you are generally not eligible for unemployment benefits simultaneously, as unemployment requires that you be able and available to work. However, these situations can be nuanced. Speak with an attorney about your specific circumstances.

Q: My employer went out of business but I haven't filed my claim yet. Is it too late?

A: It may not be too late — but you need to act immediately. The closure of your employer does not automatically foreclose your right to file a claim, but it does create additional complications and documentation challenges. Time is critical.

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11. Contact the Law Offices of James F. Aspell, P.C. — Free Consultation

If your employer has gone out of business and you are worried about your workers' compensation case, you do not have to face this alone.

The Law Offices of James F. Aspell, P.C. has recovered millions of dollars in workers' compensation benefits on behalf of injured Connecticut workers. We know the system. We know the insurance companies. And we know how to fight for workers whose employers are no longer in the picture.

Here's what to expect when you contact us:

✅ A genuine free consultation — no pressure, no obligation, no cost to you.

✅ Straight answers — we will tell you exactly where your case stands and what your options are.

✅ Contingency fee representation — you pay nothing unless we obtain benefits for you.

✅ Experienced Connecticut workers' compensation advocates — not a paralegal, not a call center. Real lawyers who have handled these cases for decades.

Don't wait. Workers' compensation deadlines are real, insurance companies act quickly to protect their own interests, and every day you wait is a day that could complicate your case.

Call the Law Offices of James F. Aspell, P.C. today for your free consultation.

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The information in this article is provided for general educational purposes and does not constitute legal advice. Every workers' compensation case is unique. Contact the Law Offices of James F. Aspell, P.C. for advice specific to your situation.

Law Offices of James F. Aspell, P.C. — Connecticut Workers' Compensation Attorneys