II
119THCONGRESS
1
STSESSION S. 1381
To amend title 11, United States Code, to improve protections for employees
and retirees in business bankruptcies.
IN THE SENATE OF THE UNITED STATES
APRIL9, 2025
Mr. D
URBIN(for himself, Mr. HAWLEY, Mr. SCHATZ, Ms. DUCKWORTH, Ms.
K
LOBUCHAR, and Mr. WHITEHOUSE) introduced the following bill; which
was read twice and referred to the Committee on the Judiciary
A BILL
To amend title 11, United States Code, to improve protec-
tions for employees and retirees in business bankruptcies.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3
(a) S
HORTTITLE.—This Act may be cited as the 4
‘‘Protecting Employees and Retirees in Business Bank-5
ruptcies Act of 2025’’. 6
(b) T
ABLE OFCONTENTS.—The table of contents of 7
this Act is as follows: 8
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
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TITLE I—IMPROVING RECOVERIES FOR EMPLOYEES AND
RETIREES
Sec. 101. Increased wage priority.
Sec. 102. Claim for stock value losses in defined contribution plans.
Sec. 103. Priority for severance pay and contributions to employee benefit
plans.
Sec. 104. Financial returns for employees and retirees.
Sec. 105. Priority for WARN Act damages.
TITLE II—REDUCING EMPLOYEES’ AND RETIREES’ LOSSES
Sec. 201. Rejection of collective bargaining agreements.
Sec. 202. Payment of insurance benefits to retired employees.
Sec. 203. Protection of employee benefits in a sale of assets.
Sec. 204. Claim for pension losses.
Sec. 205. Payments by secured lender.
Sec. 206. Preservation of jobs and benefits.
Sec. 207. Termination of exclusivity.
Sec. 208. Claim for withdrawal liability.
TITLE III—RESTRICTING EXECUTIVE COMPENSATION PROGRAMS
Sec. 301. Executive compensation upon exit from bankruptcy.
Sec. 302. Limitations on executive compensation enhancements.
Sec. 303. Prohibition against special compensation payments.
Sec. 304. Assumption of executive benefit plans.
Sec. 305. Recovery of executive compensation.
Sec. 306. Preferential compensation transfer.
TITLE IV—OTHER PROVISIONS
Sec. 401. Union proof of claim.
Sec. 402. Exception from automatic stay.
Sec. 403. Effect on collective bargaining agreements under the Railway Labor
Act.
SEC. 2. FINDINGS.
1
The Congress finds the following: 2
(1) Business bankruptcies have increased 3
sharply in recent years and remain at high levels. 4
These bankruptcies include several of the largest 5
business bankruptcy filings in history. As the use of 6
bankruptcy has expanded, job preservation and re-7
tirement security are placed at greater risk. 8
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(2) Laws enacted to improve recoveries for em-1
ployees and retirees and limit their losses in bank-2
ruptcy cases have not kept pace with the increasing 3
and broader use of bankruptcy by businesses in all 4
sectors of the economy. However, while protections 5
for employees and retirees in bankruptcy cases have 6
eroded, management compensation plans devised for 7
those in charge of troubled businesses have become 8
more prevalent and are escaping adequate scrutiny. 9
(3) Changes in the law regarding these matters 10
are urgently needed as bankruptcy is used to ad-11
dress increasingly more complex and diverse condi-12
tions affecting troubled businesses and industries. 13
TITLE I—IMPROVING RECOV-14
ERIES FOR EMPLOYEES AND 15
RETIREES 16
SEC. 101. INCREASED WAGE PRIORITY. 17
Section 507(a) of title 11, United States Code, is 18
amended— 19
(1) in paragraph (4)— 20
(A) by redesignating subparagraphs (A) 21
and (B) as clauses (i) and (ii), respectively; 22
(B) in the matter preceding clause (i), as 23
so redesignated, by inserting ‘‘(A)’’ before 24
‘‘Fourth’’; 25
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(C) in subparagraph (A), as so designated, 1
in the matter preceding clause (i), as so redes-2
ignated— 3
(i) by striking ‘‘$10,000’’ and insert-4
ing ‘‘$20,000’’; 5
(ii) by striking ‘‘within 180 days’’; 6
and 7
(iii) by striking ‘‘or the date of the 8
cessation of the debtor’s business, which-9
ever occurs first,’’; and 10
(D) by adding at the end the following: 11
‘‘(B) Severance pay described in subparagraph 12
(A)(i) shall be deemed earned in full upon the layoff 13
or termination of employment of the individual to 14
whom the severance is owed.’’; and 15
(2) in paragraph (5)— 16
(A) in subparagraph (A)— 17
(i) by striking ‘‘within 180 days’’; and 18
(ii) by striking ‘‘or the date of the 19
cessation of the debtor’s business, which-20
ever occurs first’’; and 21
(B) by striking subparagraph (B) and in-22
serting the following: 23
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‘‘(B) for each such plan, to the extent of 1
the number of employees covered by each such 2
plan, multiplied by $20,000.’’. 3
SEC. 102. CLAIM FOR STOCK VALUE LOSSES IN DEFINED 4
CONTRIBUTION PLANS. 5
Section 101(5) of title 11, United States Code, is 6
amended— 7
(1) in subparagraph (A), by striking ‘‘or’’ at 8
the end; 9
(2) in subparagraph (B), by striking the period 10
at the end and inserting ‘‘; or’’; and 11
(3) by adding at the end the following: 12
‘‘(C) right or interest in equity securities 13
of the debtor, or an affiliate of the debtor, if— 14
‘‘(i) the equity securities are held in a 15
defined contribution plan (within the 16
meaning of section 3(34) of the Employee 17
Retirement Income Security Act of 1974 18
(29 U.S.C. 1002(34))) for the benefit of 19
an individual who is not an insider, a sen-20
ior executive officer, or any of the 20 high-21
est compensated employees of the debtor 22
who are not insiders or senior executive of-23
ficers; 24
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‘‘(ii) the equity securities were attrib-1
utable to either employer contributions by 2
the debtor or an affiliate of the debtor, or 3
elective deferrals (within the meaning of 4
section 402(g) of the Internal Revenue 5
Code of 1986), and any earnings thereon; 6
and 7
‘‘(iii) an employer or plan sponsor 8
who has commenced a case under this title 9
has committed fraud with respect to such 10
plan or has otherwise breached a duty to 11
the participant that has proximately 12
caused the loss of value.’’. 13
SEC. 103. PRIORITY FOR SEVERANCE PAY AND CONTRIBU-14
TIONS TO EMPLOYEE BENEFIT PLANS. 15
Section 503(b) of title 11, United States Code, is 16
amended— 17
(1) in paragraph (8)(B), by striking ‘‘and’’ at 18
the end; 19
(2) in paragraph (9), by striking the period and 20
inserting a semicolon; and 21
(3) by adding at the end the following: 22
‘‘(10) severance pay owed to employees of the 23
debtor (other than to an insider of the debtor, a sen-24
ior executive officer of the debtor, the 20 highest 25
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compensated employees of the debtor who are not in-1
siders or senior executive officers, any department or 2
division manager of the debtor, or any consultant 3
providing services to the debtor), under a plan, pro-4
gram, or policy generally applicable to employees of 5
the debtor (but not under an individual contract of 6
employment), or owed pursuant to a collective bar-7
gaining agreement, for layoff or termination on or 8
after the date of the filing of the petition, which pay 9
shall be deemed earned in full upon such layoff or 10
termination of employment; and 11
‘‘(11) any contribution to an employee benefit 12
plan that is due on or after the date of the filing of 13
the petition.’’. 14
SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RE-15
TIREES. 16
Section 1129(a) of title 11, United States Code is 17
amended— 18
(1) by striking paragraph (13) and inserting 19
the following: 20
‘‘(13) With respect to retiree benefits, as that 21
term is defined in section 1114(a), the plan— 22
‘‘(A) provides for the continuation after 23
the effective date of the plan of payment of all 24
retiree benefits at the level established pursuant 25
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to subsection (e)(1)(B) or (g) of section 1114 1
at any time before the date of confirmation of 2
the plan, for the duration of the period for 3
which the debtor has obligated itself to provide 4
such benefits, or if no modifications are made 5
before confirmation of the plan, the continu-6
ation of all such retiree benefits maintained or 7
established in whole or in part by the debtor be-8
fore the date of the filing of the petition; and 9
‘‘(B) provides for recovery of claims arising 10
from the modification of retiree benefits or for 11
other financial returns, as negotiated by the 12
debtor and the authorized representative (to the 13
extent that such returns are paid under, rather 14
than outside of, a plan).’’; and 15
(2) by adding at the end the following: 16
‘‘(17) The plan provides for recovery of dam-17
ages payable for the rejection of a collective bar-18
gaining agreement, or for other financial returns as 19
negotiated by the debtor and the authorized rep-20
resentative under section 1113 (to the extent that 21
such returns are paid under, rather than outside of, 22
a plan).’’. 23
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SEC. 105. PRIORITY FOR WARN ACT DAMAGES. 1
Section 503(b)(1)(A)(ii) of title 11, United States 2
Code is amended by inserting ‘‘any back pay, civil penalty, 3
or damages for a violation of any Federal or State labor 4
and employment law, including the Worker Adjustment 5
and Retraining Notification Act (29 U.S.C. 2101 et seq.) 6
and any comparable State law, and’’ before ‘‘wages and 7
benefits’’ each place that term appears. 8
TITLE II—REDUCING EMPLOY-9
EES’ AND RETIREES’ LOSSES 10
SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREE-11
MENTS. 12
Section 1113 of title 11, United States Code, is 13
amended by striking subsections (a) through (f) and in-14
serting the following: 15
‘‘(a) The debtor in possession, or the trustee if one 16
has been appointed under this chapter, other than as pro-17
vided in section 103(m) for collective bargaining agree-18
ments covered by the Railway Labor Act (45 U.S.C. 151 19
et seq.), may reject a collective bargaining agreement only 20
in accordance with this section. In this section, a reference 21
to the trustee includes the debtor in possession. 22
‘‘(b) No provision of this title shall be construed to 23
permit the trustee to unilaterally terminate or alter any 24
provision of a collective bargaining agreement before com-25
plying with this section. The trustee shall timely pay all 26
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monetary obligations arising under the terms of the collec-1
tive bargaining agreement. Any such payment required to 2
be made before a plan confirmed under section 1129 is 3
effective has the status of an allowed administrative ex-4
pense under section 503. 5
‘‘(c)(1) If the trustee seeks modification of a collec-6
tive bargaining agreement, the trustee shall provide notice 7
to the labor organization representing the employees cov-8
ered by the collective bargaining agreement that modifica-9
tions are being proposed under this section, and shall 10
promptly provide an initial proposal for modifications to 11
the collective bargaining agreement. Thereafter, the trust-12
ee shall confer in good faith with the labor organization, 13
at reasonable times and for a reasonable period in light 14
of the complexity of the case, in attempting to reach mutu-15
ally acceptable modifications of the collective bargaining 16
agreement. 17
‘‘(2) The initial proposal and subsequent proposals 18
by the trustee for modification of a collective bargaining 19
agreement shall be based upon a business plan for the re-20
organization of the debtor, and shall reflect the most com-21
plete and reliable information available. The trustee shall 22
provide to the labor organization all information that is 23
relevant for negotiations. The court may enter a protective 24
order to prevent the disclosure of information if disclosure 25
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could compromise the position of the debtor with respect 1
to the competitors in the industry of the debtor, subject 2
to the needs of the labor organization to evaluate the pro-3
posals of the trustee and any application for rejection of 4
the collective bargaining agreement or for interim relief 5
pursuant to this section. 6
‘‘(3) In consideration of Federal policy encouraging 7
the practice and process of collective bargaining and in 8
recognition of the bargained-for expectations of the em-9
ployees covered by the collective bargaining agreement, 10
modifications proposed by the trustee— 11
‘‘(A) shall be proposed only as part of a pro-12
gram of workforce and nonworkforce cost savings 13
devised for the reorganization of the debtor, includ-14
ing savings in management personnel costs; 15
‘‘(B) shall be limited to modifications designed 16
to achieve a specified aggregate financial contribu-17
tion for the employees covered by the collective bar-18
gaining agreement (taking into consideration any 19
labor cost savings negotiated within the 12-month 20
period before the filing of the petition), and shall be 21
not more than the minimum savings essential to per-22
mit the debtor to exit bankruptcy, such that con-23
firmation of a plan of reorganization is not likely to 24
be followed by the liquidation, or the need for fur-25
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ther financial reorganization, of the debtor (or any 1
successor to the debtor) in the short term; and 2
‘‘(C) shall not be disproportionate or overly bur-3
den the employees covered by the collective bar-4
gaining agreement, either in the amount of the cost 5
savings sought from such employees or the nature of 6
the modifications. 7
‘‘(d)(1) If, after a period of negotiations, the trustee 8
and the labor organization have not reached an agreement 9
over mutually satisfactory modifications, and further ne-10
gotiations are not likely to produce mutually satisfactory 11
modifications, the trustee may file a motion seeking rejec-12
tion of the collective bargaining agreement after notice 13
and a hearing. Absent agreement of the parties, no such 14
hearing shall be held before the expiration of the 21-day 15
period beginning on the date on which notice of the hear-16
ing is provided to the labor organization representing the 17
employees covered by the collective bargaining agreement. 18
Only the debtor and the labor organization may appear 19
and be heard at such hearing. An application for rejection 20
shall seek rejection effective upon the entry of an order 21
granting the relief. 22
‘‘(2) In consideration of Federal policy encouraging 23
the practice and process of collective bargaining and in 24
recognition of the bargained-for expectations of the em-25
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ployees covered by the collective bargaining agreement, the 1
court may grant a motion seeking rejection of a collective 2
bargaining agreement only if, based on clear and con-3
vincing evidence— 4
‘‘(A) the court finds that the trustee has com-5
plied with the requirements of subsection (c); 6
‘‘(B) the court has considered alternative pro-7
posals by the labor organization and has concluded 8
that such proposals do not meet the requirements of 9
subsection (c)(3)(B); 10
‘‘(C) the court finds that further negotiations 11
regarding the proposal of the trustee or an alter-12
native proposal by the labor organization are not 13
likely to produce an agreement; 14
‘‘(D) the court finds that implementation of the 15
proposal of the trustee shall not— 16
‘‘(i) cause a material diminution in the 17
purchasing power of the employees covered by 18
the collective bargaining agreement; 19
‘‘(ii) adversely affect the ability of the 20
debtor to retain an experienced and qualified 21
workforce; or 22
‘‘(iii) impair the labor relations of the 23
debtor such that the ability to achieve a feasible 24
reorganization would be compromised; and 25
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‘‘(E) the court concludes that rejection of the 1
collective bargaining agreement and immediate im-2
plementation of the proposal of the trustee is essen-3
tial to permit the debtor to exit bankruptcy, such 4
that confirmation of a plan of reorganization is not 5
likely to be followed by liquidation, or the need for 6
further financial reorganization, of the debtor (or 7
any successor to the debtor) in the short term. 8
‘‘(3) If, during the bankruptcy, the trustee has imple-9
mented a program of incentive pay, bonuses, or other fi-10
nancial returns for an insider of the debtor, a senior exec-11
utive officer of the debtor, any of the 20 highest com-12
pensated employees of the debtor who are not insiders or 13
senior executive officers, any department or division man-14
ager of the debtor, or any consultant providing services 15
to the debtor, or such a program was implemented within 16
180 days before the date of the filing of the petition, the 17
court shall presume that the trustee has failed to satisfy 18
the requirements of subsection (c)(3)(C). 19
‘‘(4) In no case shall the court enter an order reject-20
ing a collective bargaining agreement that would result in 21
modifications to a level lower than the level proposed by 22
the trustee in the proposal found by the court to have com-23
plied with the requirements of this section. 24
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‘‘(5) At any time after the date on which an order 1
rejecting a collective bargaining agreement is entered, or 2
in the case of a collective bargaining agreement entered 3
into between the trustee and the labor organization pro-4
viding mutually satisfactory modifications, at any time 5
after that collective bargaining agreement has been en-6
tered into, the labor organization may apply to the court 7
for an order seeking an increase in the level of wages or 8
benefits, or relief from working conditions, based upon 9
changed circumstances. The court shall grant the request 10
only if the increase or other relief is not inconsistent with 11
the standard set forth in paragraph (2)(E). 12
‘‘(e) During a period during which a collective bar-13
gaining agreement at issue under this section continues 14
in effect and a motion for rejection of the collective bar-15
gaining agreement has been filed, if essential to the con-16
tinuation of the business of the debtor or in order to avoid 17
irreparable damage to the estate, the court, after notice 18
and a hearing, may authorize the trustee to implement 19
interim changes in the terms, conditions, wages, benefits, 20
or work rules provided by the collective bargaining agree-21
ment. Any hearing under this subsection shall be sched-22
uled in accordance with the needs of the trustee. The im-23
plementation of such interim changes shall not render the 24
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application for rejection moot and may be authorized for 1
not more than 14 days in total. 2
‘‘(f)(1) Rejection of a collective bargaining agreement 3
constitutes a breach of the collective bargaining agree-4
ment, and shall be effective no earlier than the entry of 5
an order granting such relief. 6
‘‘(2) Notwithstanding paragraph (1), solely for pur-7
poses of determining and allowing a claim arising from 8
the rejection of a collective bargaining agreement, rejec-9
tion shall be treated as rejection of an executory contract 10
under section 365(g) and shall be allowed or disallowed 11
in accordance with section 502(g)(1). No claim for rejec-12
tion damages shall be limited by section 502(b)(7). Eco-13
nomic self-help by a labor organization shall be permitted 14
upon a court order granting a motion to reject a collective 15
bargaining agreement under subsection (d) or pursuant to 16
subsection (e), and no provision of this title or of any other 17
provision of Federal or State law may be construed to the 18
contrary. 19
‘‘(g) The trustee shall provide for the reasonable fees 20
and costs incurred by a labor organization under this sec-21
tion, upon request and after notice and a hearing. 22
‘‘(h) A collective bargaining agreement that is as-23
sumed shall be assumed in accordance with section 365.’’. 24
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SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED 1
EMPLOYEES. 2
Section 1114 of title 11, United States Code, is 3
amended— 4
(1) in subsection (a), by inserting ‘‘, without re-5
gard to whether the debtor asserts a right to unilat-6
erally modify such payments under such plan, fund, 7
or program’’ before the period at the end; 8
(2) in subsection (b)(2), by inserting ‘‘, and a 9
labor organization serving as the authorized rep-10
resentative under subsection (c)(1),’’ after ‘‘section’’; 11
(3) by striking subsection (f) and inserting the 12
following: 13
‘‘(f)(1) If a trustee seeks modification of retiree bene-14
fits, the trustee shall provide a notice to the authorized 15
representative that modifications are being proposed pur-16
suant to this section, and shall promptly provide an initial 17
proposal. Thereafter, the trustee shall confer in good faith 18
with the authorized representative at reasonable times and 19
for a reasonable period in light of the complexity of the 20
case in attempting to reach mutually satisfactory modi-21
fications. 22
‘‘(2) The initial proposal and subsequent proposals 23
by the trustee shall be based upon a business plan for the 24
reorganization of the debtor and shall reflect the most 25
complete and reliable information available. The trustee 26
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shall provide to the authorized representative all informa-1
tion that is relevant for the negotiations. The court may 2
enter a protective order to prevent the disclosure of infor-3
mation if disclosure could compromise the position of the 4
debtor with respect to the competitors in the industry of 5
the debtor, subject to the needs of the authorized rep-6
resentative to evaluate the proposals of the trustee and 7
an application pursuant to subsection (g) or (h). 8
‘‘(3) Modifications proposed by the trustee— 9
‘‘(A) shall be proposed only as part of a pro-10
gram of workforce and nonworkforce cost savings 11
devised for the reorganization of the debtor, includ-12
ing savings in management personnel costs; 13
‘‘(B) shall be limited to modifications that are 14
designed to achieve a specified aggregate financial 15
contribution for the retiree group represented by the 16
authorized representative (taking into consideration 17
any cost savings implemented within the 12-month 18
period before the date of filing of the petition with 19
respect to the retiree group), and shall be no more 20
than the minimum savings essential to permit the 21
debtor to exit bankruptcy, such that confirmation of 22
a plan of reorganization is not likely to be followed 23
by the liquidation, or the need for further financial 24
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reorganization, of the debtor (or any successor to 1
the debtor) in the short term; and 2
‘‘(C) shall not be disproportionate or overly bur-3
den the retiree group, either in the amount of the 4
cost savings sought from such group or the nature 5
of the modifications.’’; 6
(4) in subsection (g)— 7
(A) by striking the subsection designation 8
and all that follows through the semicolon at 9
the end of paragraph (3) and inserting the fol-10
lowing: 11
‘‘(g)(1) If, after a period of negotiations, the trustee 12
and the authorized representative have not reached agree-13
ment over mutually satisfactory modifications and further 14
negotiations are not likely to produce mutually satisfac-15
tory modifications, the trustee may file a motion seeking 16
modifications in the payment of retiree benefits after no-17
tice and a hearing. Absent agreement of the parties, no 18
such hearing shall be held before the expiration of the 21- 19
day period beginning on the date on which notice of the 20
hearing is provided to the authorized representative. Only 21
the debtor and the authorized representative may appear 22
and be heard at such hearing. 23
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‘‘(2) The court may grant a motion to modify the 1
payment of retiree benefits only if, based on clear and con-2
vincing evidence— 3
‘‘(A) the court finds that the trustee has com-4
plied with the requirements of subsection (f); 5
‘‘(B) the court has considered alternative pro-6
posals by the authorized representative and has de-7
termined that such proposals do not meet the re-8
quirements of subsection (f)(3)(B); 9
‘‘(C) the court finds that further negotiations 10
regarding the proposal of the trustee or an alter-11
native proposal by the authorized representative are 12
not likely to produce a mutually satisfactory agree-13
ment; 14
‘‘(D) the court finds that implementation of the 15
proposal shall not cause irreparable harm to the af-16
fected retirees; and 17
‘‘(E) the court concludes that an order granting 18
the motion and immediate implementation of the 19
proposal of the trustee is essential to permit the 20
debtor to exit bankruptcy, such that confirmation of 21
a plan of reorganization is not likely to be followed 22
by liquidation, or the need for further financial reor-23
ganization, of the debtor (or a successor to the debt-24
or) in the short term. 25
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•S 1381 IS
‘‘(3) If, during the bankruptcy, a trustee has imple-1
mented a program of incentive pay, bonuses, or other fi-2
nancial returns for insiders of the debtor, senior executive 3
officers of the debtor, the 20 highest compensated employ-4
ees of the debtor who are not insiders or senior executive 5
officers, any department or division managers of the debt-6
or, or any consultants providing services to the debtor, or 7
such a program was implemented within 180 days before 8
the date of the filing of the petition, the court shall pre-9
sume that the trustee has failed to satisfy the require-10
ments of subsection (f)(3)(C).’’; and 11
(B) in the matter following paragraph 12
(3)— 13
(i) by striking ‘‘except that in no 14
case’’ and inserting the following: 15
‘‘(4) In no case’’; and 16
(ii) by striking ‘‘is consistent with the 17
standard set forth in paragraph (3)’’ and 18
inserting ‘‘assures that all creditors, the 19
debtor, and all of the affected parties are 20
treated fairly and equitably, and is clearly 21
favored by the balance of the equities’’; 22
(5) in subsection (h)(1), by inserting ‘‘for a pe-23
riod of not longer than 14 days’’ before the period; 24
and 25
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•S 1381 IS
(6) by striking subsection (k) and redesignating 1
subsections (l) and (m) as subsections (k) and (l), 2
respectively. 3
SEC. 203. PROTECTION OF EMPLOYEE BENEFITS IN A SALE 4
OF ASSETS. 5
(a) R
EQUIREMENTTOPRESERVEJOBS ANDMAIN-6
TAINTERMS ANDCONDITIONS OFEMPLOYMENT.—Sec-7
tion 363 of title 11, United States Code, is amended by 8
adding at the end the following: 9
‘‘(q)(1) In approving a sale or lease of property of 10
the estate under this section or a plan under chapter 11, 11
the court shall give substantial weight to the extent to 12
which a prospective purchaser or lessee of the property 13
will— 14
‘‘(A) preserve the jobs of the employees of the 15
debtor; 16
‘‘(B) maintain the terms and conditions of em-17
ployment of the employees of the debtor; and 18
‘‘(C) assume or match the pension and health 19
benefit obligations of the debtor to the retirees of 20
the debtor. 21
‘‘(2) If there are two or more offers to purchase or 22
lease property of the estate under this section or a plan 23
under chapter 11, the court shall approve the offer of the 24
prospective purchaser or lessee that will best carry out the 25
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•S 1381 IS
actions described in subparagraphs (A) through (C) of 1
paragraph (1).’’. 2
(b) C
HAPTER11 PLANS.—Section 1129(a) of title 3
11, United States Code is amended by adding at the end 4
the following: 5
‘‘(17) If the plan provides for the sale of all or 6
substantially all of the property of the estate, the 7
plan requires the purchaser of the sale to carry out 8
the actions described in subparagraphs (A) through 9
(C) of section 363(q)(1).’’. 10
SEC. 204. CLAIM FOR PENSION LOSSES. 11
Section 502 of title 11, United States Code, is 12
amended by adding at the end the following: 13
‘‘(l) The court shall allow a claim asserted by an ac-14
tive or retired participant, or by a labor organization rep-15
resenting such participants, in a defined benefit plan ter-16
minated under section 4041 or 4042 of the Employee Re-17
tirement Income Security Act of 1974 (29 U.S.C. 1341, 18
1342), for any shortfall in pension benefits accrued as of 19
the effective date of the termination of such pension plan 20
as a result of the termination of the plan and limitations 21
upon the payment of benefits imposed pursuant to section 22
4022 of that Act (29 U.S.C. 1322), notwithstanding any 23
claim asserted and collected by the Pension Benefit Guar-24
anty Corporation with respect to such termination. 25
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•S 1381 IS
‘‘(m) The court shall allow a claim of a kind described 1
in section 101(5)(C) by an active or retired participant 2
in a defined contribution plan (within the meaning of sec-3
tion 3(34) of the Employee Retirement Income Security 4
Act of 1974 (29 U.S.C. 1002(34))), or by a labor organi-5
zation representing such participants. The amount of such 6
claim shall be measured by the market value of the stock 7
at the time of contribution to, or purchase by, the plan 8
and the value as of the commencement of the case.’’. 9
SEC. 205. PAYMENTS BY SECURED LENDER. 10
Section 506(c) of title 11, United States Code, is 11
amended— 12
(1) by adding ‘‘(1)’’ after ‘‘(c)’’; and 13
(2) by adding at the end the following: 14
‘‘(2) If one or more employees of the debtor have not 15
received wages, accrued vacation, severance, or any other 16
compensation owed under a plan, program, policy or prac-17
tice of the debtor, or pursuant to the terms of a collective 18
bargaining agreement, for services rendered on or after 19
the date of the commencement of the case, or the debtor 20
has not made a contribution due under an employee ben-21
efit plan on or after the date of the commencement of the 22
case, such unpaid obligations shall be deemed reasonable, 23
necessary costs and expenses of preserving, or disposing 24
of, property securing an allowed secured claim and benefit-25
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•S 1381 IS
ting the holder of the allowed secured claim, and shall be 1
recovered by the trustee for payment to the employees or 2
the employee benefit plan, as applicable, even if the trust-3
ee, or a successor or predecessor in interest has otherwise 4
waived the provisions of this subsection under an agree-5
ment with the holder of the allowed secured claim or a 6
successor or predecessor in interest.’’. 7
SEC. 206. PRESERVATION OF JOBS AND BENEFITS. 8
Chapter 11 of title 11, United States Code, is amend-9
ed— 10
(1) by inserting before section 1101 the fol-11
lowing: 12
‘‘§ 1100. Statement of purpose 13
‘‘A case under this chapter involving a debtor that 14
is not an individual shall have as its principal purpose the 15
reorganization of its business to preserve going concern 16
value to the maximum extent possible through the produc-17
tive use of its assets and the preservation of jobs that will 18
sustain productive economic activity.’’; 19
(2) in section 1129— 20
(A) in subsection (a), as amended by sec-21
tion 104 of this Act, by adding at the end the 22
following: 23
‘‘(18) If the plan contemplates continuation of 24
the debtor’s business, the proponent of the plan has 25
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•S 1381 IS
demonstrated that the reorganization preserves 1
going concern value to the maximum extent possible 2
through the productive use of the assets of the debt-3
or and preserves jobs that sustain productive eco-4
nomic activity.’’; and 5
(B) in subsection (c)— 6
(i) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 7
(ii) by striking the last sentence and 8
inserting the following: 9
‘‘(2) If the requirements of subsections (a) and (b) 10
are met with respect to more than 1 plan, the court shall, 11
in determining which plan to confirm— 12
‘‘(A) consider the extent to which each plan 13
would preserve going concern value through the pro-14
ductive use of the assets of the debtor and the pres-15
ervation of jobs that sustain productive economic ac-16
tivity; and 17
‘‘(B) confirm the plan that better serves such 18
interests. 19
‘‘(3) A plan that incorporates the terms of a settle-20
ment with a labor organization representing employees of 21
the debtor shall presumptively constitute the plan that sat-22
isfies this subsection.’’; and 23
(3) in the table of sections, by inserting before 24
the item relating to section 1101 the following: 25
‘‘1100. Statement of purpose.’’.
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•S 1381 IS
SEC. 207. TERMINATION OF EXCLUSIVITY. 1
Section 1121(d) of title 11, United States Code, is 2
amended by adding at the end the following: 3
‘‘(3) For purposes of this subsection, cause for reduc-4
ing the 120-day period or the 180-day period includes— 5
‘‘(A) the filing of a motion pursuant to section 6
1113 seeking rejection of a collective bargaining 7
agreement if a plan based upon an alternative pro-8
posal by the labor organization is reasonably likely 9
to be confirmed within a reasonable time; and 10
‘‘(B) the proposed filing of a plan by a pro-11
ponent other than the debtor, which incorporates the 12
terms of a settlement with a labor organization if 13
such plan is reasonably likely to be confirmed within 14
a reasonable time.’’. 15
SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY. 16
Section 503(b) of title 11, United States Code, as 17
amended by section 103 of this Act, is amended by adding 18
at the end the following: 19
‘‘(12) with respect to withdrawal liability owed 20
to a multi-employer pension plan for a complete or 21
partial withdrawal pursuant to section 4201 of the 22
Employee Retirement Income Security Act of 1974 23
(29 U.S.C. 1381) where such withdrawal occurs on 24
or after the commencement of the case, an amount 25
equal to the total benefits payable from such pension 26
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•S 1381 IS
plan that accrued as a result of employees’ services 1
rendered to the debtor during the period beginning 2
on the date of commencement of the case and end-3
ing on the date of the withdrawal from the plan.’’. 4
TITLE III—RESTRICTING EXECU-5
TIVE COMPENSATION PRO-6
GRAMS 7
SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM 8
BANKRUPTCY. 9
Section 1129(a) of title 11, United States Code, as 10
amended by sections 104 and 206 of this Act, is amend-11
ed— 12
(1) in paragraph (4)— 13
(A) by adding ‘‘(A)’’ after ‘‘(4)’’; 14
(B) in subparagraph (A), as so designated, 15
by striking ‘‘Any payment’’ and inserting ‘‘Sub-16
ject to subparagraph (B), any payment’’; and 17
(C) by adding at the end the following: 18
‘‘(B)(i) Subject to clause (ii), the plan does not 19
provide for payments or other distributions to, or for 20
the benefit of, an insider of the debtor, a senior ex-21
ecutive officer of the debtor, any of the 20 highest 22
compensated employees of the debtor who are not in-23
siders or senior executive officers, any department or 24
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•S 1381 IS
division manager of the debtor, or any consultant 1
providing services to the debtor, unless— 2
‘‘(I) the payments or other distributions 3
are part of a program that is generally applica-4
ble to all full-time employees of the debtor; and 5
‘‘(II) the payments or distributions do not 6
exceed the compensation limits established in 7
section 503(c)(1) in comparison to the non-8
management workforce of the debtor. 9
‘‘(ii) The requirement under clause (i) shall not 10
apply to the compensation described in paragraph 11
(5)(C).’’; and 12
(2) in paragraph (5)— 13
(A) in subparagraph (A)(ii), by striking 14
‘‘and’’ at the end; 15
(B) in subparagraph (B), by striking the 16
period at the end and inserting ‘‘; and’’; and 17
(C) by adding at the end the following: 18
‘‘(C) the compensation disclosed under subpara-19
graph (B) has been approved by, or is subject to the 20
approval of, the court as— 21
‘‘(i) reasonable when compared to individ-22
uals holding comparable positions at com-23
parable companies in the same industry as the 24
debtor; and 25
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•S 1381 IS
‘‘(ii) not excessive or disproportionate in 1
light of economic losses of the nonmanagement 2
workforce of the debtor.’’. 3
SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION EN-4
HANCEMENTS. 5
Section 503(c) of title 11, United States Code, is 6
amended— 7
(1) in the matter preceding paragraph (1), by 8
inserting ‘‘and subject to section 363(b)(3)’’ after 9
‘‘subsection (b)’’; 10
(2) in paragraph (1)— 11
(A) in the matter preceding subparagraph 12
(A)— 13
(i) by inserting ‘‘, a senior executive 14
officer of the debtor, any the 20 highest 15
compensated employees of the debtor who 16
are not insiders or senior executive officers, 17
any department or division manager of the 18
debtor, or any consultant providing serv-19
ices to the debtor’’ before ‘‘for the pur-20
pose’’; and 21
(ii) by inserting ‘‘or for the payment 22
of performance or incentive compensation, 23
or a bonus of any kind, or other financial 24
returns designed to replace or enhance in-25
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•S 1381 IS
centive, stock, or other compensation in ef-1
fect before the date of the commencement 2
of the case,’’ after ‘‘remain with the debt-3
or’s business,’’; 4
(B) by amending subparagraph (A) to read 5
as follows: 6
‘‘(A) the transfer or obligation is part of a 7
program that is generally applicable to all full- 8
time employees of the debtor; and’’; 9
(C) by striking subparagraph (B); 10
(D) by redesignating subparagraph (C) as 11
subparagraph (B); and 12
(E) in subparagraph (B), as so redesig-13
nated— 14
(i) in clause (i), by striking ‘‘10’’ and 15
inserting ‘‘2’’; and 16
(ii) in clause (ii)— 17
(I) by striking ‘‘25’’ and insert-18
ing ‘‘10’’; and 19
(II) by striking ‘‘insider’’ and in-20
serting ‘‘person’’; 21
(3) in paragraph (2)— 22
(A) in the matter preceding subparagraph 23
(A), by inserting ‘‘, a senior executive officer of 24
the debtor, any of the 20 highest compensated 25
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•S 1381 IS
employees of the debtor who are not insiders or 1
senior executive officers, any department or di-2
vision manager of the debtor, or any consultant 3
providing services to the debtor,’’ before ‘‘, un-4
less’’; and 5
(B) in subparagraph (B), by striking ‘‘10’’ 6
and inserting ‘‘2’’; and 7
(4) by amending paragraph (3) to read as fol-8
lows: 9
‘‘(3) other transfers or obligations to, or for the 10
benefit of, an insider of the debtor, a senior execu-11
tive officer of the debtor, the 20 highest com-12
pensated employees of the debtor who are not insid-13
ers or senior executive officers, any department or 14
division manager of the debtor, or any consultant 15
providing services to the debtor that are outside of 16
the ordinary course of business, except as part of a 17
plan of reorganization and subject to the approval of 18
the court under paragraphs (4) and (5) of section 19
1129(a).’’. 20
SEC. 303. PROHIBITION AGAINST SPECIAL COMPENSATION 21
PAYMENTS. 22
Section 363 of title 11, United States Code, as 23
amended by section 203 of this Act, is amended— 24
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•S 1381 IS
(1) in subsection (b), by adding at the end the 1
following: 2
‘‘(3) No plan, program, or other transfer or obliga-3
tion to, or for the benefit of, an insider of the debtor, a 4
senior executive officer of the debtor, the 20 highest com-5
pensated employees of the debtor who are not insiders or 6
senior executive officers, any department or division man-7
ager of the debtor, or any consultant providing services 8
to the debtor shall be approved if the debtor has, on or 9
after the date that is 1 year before the date of the filing 10
of the petition— 11
‘‘(A) discontinued any plan, program, policy, or 12
practice of paying severance pay to the nonmanage-13
ment workforce of the debtor; or 14
‘‘(B) modified any plan, program, policy, or 15
practice described in subparagraph (A) in order to 16
reduce benefits under the plan, program, policy, or 17
practice.’’; and 18
(2) in subsection (c)— 19
(A) in paragraph (1), by striking ‘‘If the 20
business’’ and inserting ‘‘Except as provided in 21
paragraph (5), if the business’’; and 22
(B) by adding at the end the following: 23
‘‘(5) In the case of a transaction that is a transfer 24
or obligation described in paragraphs (1) through (3) of 25
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•S 1381 IS
section 503(c), the trustee shall obtain the prior approval 1
of the court after notice and an opportunity for a hear-2
ing.’’. 3
SEC. 304. ASSUMPTION OF EXECUTIVE BENEFIT PLANS. 4
Section 365 of title 11, United States Code, is 5
amended— 6
(1) in subsection (a), by striking ‘‘and (d)’’ and 7
inserting ‘‘(d), (q), and (r)’’; and 8
(2) by adding at the end the following: 9
‘‘(q) No deferred compensation arrangement for the 10
benefit of an insider of the debtor, a senior executive offi-11
cer of the debtor, or any of the 20 highest compensated 12
employees of the debtor who are not insiders or senior ex-13
ecutive officers shall be assumed if a defined benefit plan 14
for employees of the debtor has been terminated pursuant 15
to section 4041 or 4042 of the Employee Retirement In-16
come Security Act of 1974 (29 U.S.C. 1341, 1342), on 17
or after the date that is 1 year before the date of the com-18
mencement of the case. 19
‘‘(r) No plan, fund, program, or contract to provide 20
retiree benefits for insiders of the debtor, senior executive 21
officers of the debtor, or the 20 highest compensated em-22
ployees of the debtor who are not insiders or senior execu-23
tive officers shall be assumed if the debtor has obtained 24
relief under subsection (g) or (h) of section 1114 to impose 25
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•S 1381 IS
reductions in retiree benefits or under subsection (d) or 1
(e) of section 1113 to impose reductions in the health ben-2
efits of active employees of the debtor, or has otherwise 3
reduced or eliminated health benefits for employees or re-4
tirees of the debtor on are after the date that is 1 year 5
before the date of the commencement of the case.’’. 6
SEC. 305. RECOVERY OF EXECUTIVE COMPENSATION. 7
(a) I
NGENERAL.—Subchapter III of chapter 5 of 8
title 11, United States Code, is amended by inserting after 9
section 562 the following: 10
‘‘§ 563. Recovery of executive compensation 11
‘‘(a) If a debtor has obtained relief under section 12
1113(d) or section 1114(g), by which the debtor reduces 13
the cost of its obligations under a collective bargaining 14
agreement or a plan, fund, or program for retiree benefits 15
(as defined in section 1114(a)), the court, in granting re-16
lief, shall determine the percentage diminution in the value 17
of the obligations when compared to the obligations of the 18
debtor under the collective bargaining agreement, or with 19
respect to retiree benefits, as of the date of the commence-20
ment of the case under this title before granting such re-21
lief. In making its determination, the court shall include 22
reductions in benefits, if any, as a result of the termi-23
nation pursuant to section 4041 or 4042 of the Employee 24
Retirement Income Security Act of 1974 (29 U.S.C. 1341, 25
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•S 1381 IS
1342), of a defined benefit plan administered by the debt-1
or, or for which the debtor is a contributing employer, ef-2
fective at any time on or after 180 days before the date 3
of the commencement of a case under this title. The court 4
shall not take into account pension benefits paid or pay-5
able under that Act as a result of any such termination. 6
‘‘(b) If a defined benefit pension plan administered 7
by the debtor, or for which the debtor is a contributing 8
employer, has been terminated pursuant to section 4041 9
or 4042 of the Employee Retirement Income Security Act 10
of 1974 (29 U.S.C. 1341, 1342), effective at any time on 11
or after 180 days before the date of the commencement 12
of a case under this title, but a debtor has not obtained 13
relief under section 1113(d), or section 1114(g), the court, 14
upon motion of a party in interest, shall determine the 15
percentage diminution in the value of benefit obligations 16
when compared to the total benefit liabilities before such 17
termination. The court shall not take into account pension 18
benefits paid or payable under title IV of the Employee 19
Retirement Income Security Act of 1974 (29 U.S.C. 1301 20
et seq.) as a result of any such termination. 21
‘‘(c) Upon the determination of the percentage dimi-22
nution in value under subsection (a) or (b), the estate shall 23
have a claim for the return of the same percentage of the 24
compensation paid, directly or indirectly (including any 25
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•S 1381 IS
transfer to a self-settled trust or similar device, or to a 1
nonqualified deferred compensation plan under section 2
409A(d)(1) of the Internal Revenue Code of 1986) to any 3
officer of the debtor serving as member of the board of 4
directors of the debtor within the year before the date of 5
the commencement of the case, and any individual serving 6
as chairman or lead director of the board of directors at 7
the time of the granting of relief under section 1113 or 8
1114 or, if no such relief has been granted, the termi-9
nation of the defined benefit plan. 10
‘‘(d) The trustee or a committee appointed pursuant 11
to section 1102 may commence an action to recover such 12
claims, except that if neither the trustee nor such com-13
mittee commences an action to recover such claim by the 14
first date set for the hearing on the confirmation of plan 15
under section 1129, any party in interest may apply to 16
the court for authority to recover such claim for the ben-17
efit of the estate. The costs of recovery shall be borne by 18
the estate. 19
‘‘(e) The court shall not award postpetition com-20
pensation under section 503(c) or otherwise to any person 21
subject to subsection (c) of this section if there is a reason-22
able likelihood that such compensation is intended to reim-23
burse or replace compensation recovered by the estate 24
under this section.’’. 25
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•S 1381 IS
(b) TECHNICAL AND CONFORMINGAMENDMENT.— 1
The table of sections for chapter 5 of title 11, United 2
States Code, is amended by inserting after the item relat-3
ing to section 562 the following: 4
‘‘563. Recovery of executive compensation.’’.
SEC. 306. PREFERENTIAL COMPENSATION TRANSFER.
5
Section 547 of title 11, United States Code, is 6
amended by adding at the end the following: 7
‘‘(j)(1) The trustee may, based on reasonable due dili-8
gence in the circumstances of the case, avoid a transfer— 9
‘‘(A) made— 10
‘‘(i) to, or for the benefit of, an insider of 11
the debtor (including an obligation incurred for 12
the benefit of an insider under an employment 13
contract), a senior executive officer of the debt-14
or, the 20 highest compensated employees of 15
the debtor who are not insiders or senior execu-16
tive officers, any department or division man-17
ager of the debtor, or any consultant providing 18
services to the debtor made in anticipation of 19
bankruptcy; or 20
‘‘(ii) in anticipation of bankruptcy to a 21
consultant who is formerly an insider and who 22
is retained to provide services to an entity that 23
becomes a debtor (including an obligation under 24
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•S 1381 IS
a contract to provide services to such entity or 1
to a debtor); and 2
‘‘(B) made or incurred on or within 1 year be-3
fore the filing of the petition. 4
‘‘(2) No provision of subsection (c) shall constitute 5
a defense against the recovery of a transfer described in 6
paragraph (1). 7
‘‘(3) The trustee or a committee appointed pursuant 8
to section 1102 may commence an action to recover a 9
transfer described in paragraph (1), except that, if neither 10
the trustee nor such committee commences an action to 11
recover the transfer by the time of the commencement of 12
a hearing on the confirmation of a plan under section 13
1129, any party in interest may apply to the court for 14
authority to recover the claims for the benefit of the es-15
tate. The costs of recovery shall be borne by the estate.’’. 16
TITLE IV—OTHER PROVISIONS 17
SEC. 401. UNION PROOF OF CLAIM. 18
Section 501(a) of title 11, United States Code, is 19
amended by inserting ‘‘, including a labor organization,’’ 20
after ‘‘A creditor’’. 21
SEC. 402. EXCEPTION FROM AUTOMATIC STAY. 22
Section 362(b) of title 11, United States Code, is 23
amended— 24
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•S 1381 IS
(1) in paragraph (28), by striking ‘‘and’’ at the 1
end; 2
(2) in paragraph (29), by striking the period at 3
the end and inserting ‘‘; and’’; and 4
(3) by inserting after paragraph (29) the fol-5
lowing: 6
‘‘(30) of the commencement or continuation of 7
a grievance, arbitration, or similar dispute resolution 8
proceeding established by a collective bargaining 9
agreement that was or could have been commenced 10
against the debtor before the filing of a case under 11
this title, or the payment or enforcement of an 12
award or settlement under such proceeding.’’. 13
SEC. 403. EFFECT ON COLLECTIVE BARGAINING AGREE-14
MENTS UNDER THE RAILWAY LABOR ACT. 15
Section 103 of title 11, United States Code, is 16
amended by adding at the end the following: 17
‘‘(m) Notwithstanding sections 365, 1113, or 1114, 18
neither the court nor the trustee may change the wages, 19
working conditions, or retirement benefits of an employee 20
or a retiree of the debtor established by a collective bar-21
gaining agreement that is subject to the Railway Labor 22
Act (45 U.S.C. 151 et seq.), except in accordance with 23
section 6 of that Act (45 U.S.C. 156).’’. 24
Æ
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