Can I still sue for wrongful dismissal if my employer becomes insolvent in Ontario?

Yes, you can generally still pursue a wrongful dismissal claim even if your former employer becomes insolvent, but practically collecting on that claim becomes considerably more complicated, since an insolvent employer's assets are typically distributed according to insolvency and bankruptcy priorities that apply to all of its creditors, not just its dismissed employees. Wage-related claims sometimes receive a degree of priority treatment in an insolvency process compared to ordinary unsecured claims, but that priority is often limited in amount and does not guarantee full recovery of a wrongful dismissal award, particularly for larger claims involving extended common law notice.

Employees affected by an employer's insolvency should be aware that pursuing the claim generally means participating in the insolvency process itself, through a trustee or receiver, rather than suing the company directly in the ordinary way a solvent employer would be sued. Recovery, if any, may end up being only partial, and the process can take considerable time to sort out given how many creditors are typically involved in an insolvency proceeding.