Folsom v. Prospect Hill Resources, Inc.

Charles Folsom, Jr. appealed to the district court from the bankruptcy court's partial disallowance of his claim against the bankrupt estate. The district court reversed the bankruptcy court and held that because Folsom was not an employee at the time the debtor breached its contract with him, 11 U.S.C.A. § 502(b)(7) (West Supp.1987) does not apply to his claim. Accordingly, the district court held, his claim should have been allowed. We affirm.

The facts are not in dispute. The debt- or’s predecessor, Prospect Hill Resources, entered into an employment agreement with Folsom on July 14, 1970.…