Us Congress 2025-2026 Regular Session

Us Congress Senate Bill SB1381 Compare Versions

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Old	New	Differences
1	1	II
2	2	119THCONGRESS
3	3	1
4	4	STSESSION S. 1381
5	5	To amend title 11, United States Code, to improve protections for employees
6	6	and retirees in business bankruptcies.
7	7	IN THE SENATE OF THE UNITED STATES
8	8	APRIL9, 2025
9	9	Mr. D
10	10	URBIN(for himself, Mr. HAWLEY, Mr. SCHATZ, Ms. DUCKWORTH, Ms.
11	11	K
12	12	LOBUCHAR, and Mr. WHITEHOUSE) introduced the following bill; which
13	13	was read twice and referred to the Committee on the Judiciary
14	14	A BILL
15	15	To amend title 11, United States Code, to improve protec-
16	16	tions for employees and retirees in business bankruptcies.
17	17	Be it enacted by the Senate and House of Representa-1
18	18	tives of the United States of America in Congress assembled, 2
19	19	SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3
20	20	(a) S
21	21	HORTTITLE.—This Act may be cited as the 4
22	22	‘‘Protecting Employees and Retirees in Business Bank-5
23	23	ruptcies Act of 2025’’. 6
24	24	(b) T
25	25	ABLE OFCONTENTS.—The table of contents of 7
26	26	this Act is as follows: 8
27	27	Sec. 1. Short title; table of contents.
28	28	Sec. 2. Findings.
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31	31	•S 1381 IS
32	32	TITLE I—IMPROVING RECOVERIES FOR EMPLOYEES AND
33	33	RETIREES
34	34	Sec. 101. Increased wage priority.
35	35	Sec. 102. Claim for stock value losses in defined contribution plans.
36	36	Sec. 103. Priority for severance pay and contributions to employee benefit
37	37	plans.
38	38	Sec. 104. Financial returns for employees and retirees.
39	39	Sec. 105. Priority for WARN Act damages.
40	40	TITLE II—REDUCING EMPLOYEES’ AND RETIREES’ LOSSES
41	41	Sec. 201. Rejection of collective bargaining agreements.
42	42	Sec. 202. Payment of insurance benefits to retired employees.
43	43	Sec. 203. Protection of employee benefits in a sale of assets.
44	44	Sec. 204. Claim for pension losses.
45	45	Sec. 205. Payments by secured lender.
46	46	Sec. 206. Preservation of jobs and benefits.
47	47	Sec. 207. Termination of exclusivity.
48	48	Sec. 208. Claim for withdrawal liability.
49	49	TITLE III—RESTRICTING EXECUTIVE COMPENSATION PROGRAMS
50	50	Sec. 301. Executive compensation upon exit from bankruptcy.
51	51	Sec. 302. Limitations on executive compensation enhancements.
52	52	Sec. 303. Prohibition against special compensation payments.
53	53	Sec. 304. Assumption of executive benefit plans.
54	54	Sec. 305. Recovery of executive compensation.
55	55	Sec. 306. Preferential compensation transfer.
56	56	TITLE IV—OTHER PROVISIONS
57	57	Sec. 401. Union proof of claim.
58	58	Sec. 402. Exception from automatic stay.
59	59	Sec. 403. Effect on collective bargaining agreements under the Railway Labor
60	60	Act.
61	61	SEC. 2. FINDINGS.
62	62	1
63	63	The Congress finds the following: 2
64	64	(1) Business bankruptcies have increased 3
65	65	sharply in recent years and remain at high levels. 4
66	66	These bankruptcies include several of the largest 5
67	67	business bankruptcy filings in history. As the use of 6
68	68	bankruptcy has expanded, job preservation and re-7
69	69	tirement security are placed at greater risk. 8
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72	72	•S 1381 IS
73	73	(2) Laws enacted to improve recoveries for em-1
74	74	ployees and retirees and limit their losses in bank-2
75	75	ruptcy cases have not kept pace with the increasing 3
76	76	and broader use of bankruptcy by businesses in all 4
77	77	sectors of the economy. However, while protections 5
78	78	for employees and retirees in bankruptcy cases have 6
79	79	eroded, management compensation plans devised for 7
80	80	those in charge of troubled businesses have become 8
81	81	more prevalent and are escaping adequate scrutiny. 9
82	82	(3) Changes in the law regarding these matters 10
83	83	are urgently needed as bankruptcy is used to ad-11
84	84	dress increasingly more complex and diverse condi-12
85	85	tions affecting troubled businesses and industries. 13
86	86	TITLE I—IMPROVING RECOV-14
87	87	ERIES FOR EMPLOYEES AND 15
88	88	RETIREES 16
89	89	SEC. 101. INCREASED WAGE PRIORITY. 17
90	90	Section 507(a) of title 11, United States Code, is 18
91	91	amended— 19
92	92	(1) in paragraph (4)— 20
93	93	(A) by redesignating subparagraphs (A) 21
94	94	and (B) as clauses (i) and (ii), respectively; 22
95	95	(B) in the matter preceding clause (i), as 23
96	96	so redesignated, by inserting ‘‘(A)’’ before 24
97	97	‘‘Fourth’’; 25
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100	100	•S 1381 IS
101	101	(C) in subparagraph (A), as so designated, 1
102	102	in the matter preceding clause (i), as so redes-2
103	103	ignated— 3
104	104	(i) by striking ‘‘$10,000’’ and insert-4
105	105	ing ‘‘$20,000’’; 5
106	106	(ii) by striking ‘‘within 180 days’’; 6
107	107	and 7
108	108	(iii) by striking ‘‘or the date of the 8
109	109	cessation of the debtor’s business, which-9
110	110	ever occurs first,’’; and 10
111	111	(D) by adding at the end the following: 11
112	112	‘‘(B) Severance pay described in subparagraph 12
113	113	(A)(i) shall be deemed earned in full upon the layoff 13
114	114	or termination of employment of the individual to 14
115	115	whom the severance is owed.’’; and 15
116	116	(2) in paragraph (5)— 16
117	117	(A) in subparagraph (A)— 17
118	118	(i) by striking ‘‘within 180 days’’; and 18
119	119	(ii) by striking ‘‘or the date of the 19
120	120	cessation of the debtor’s business, which-20
121	121	ever occurs first’’; and 21
122	122	(B) by striking subparagraph (B) and in-22
123	123	serting the following: 23
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126	126	•S 1381 IS
127	127	‘‘(B) for each such plan, to the extent of 1
128	128	the number of employees covered by each such 2
129	129	plan, multiplied by $20,000.’’. 3
130	130	SEC. 102. CLAIM FOR STOCK VALUE LOSSES IN DEFINED 4
131	131	CONTRIBUTION PLANS. 5
132	132	Section 101(5) of title 11, United States Code, is 6
133	133	amended— 7
134	134	(1) in subparagraph (A), by striking ‘‘or’’ at 8
135	135	the end; 9
136	136	(2) in subparagraph (B), by striking the period 10
137	137	at the end and inserting ‘‘; or’’; and 11
138	138	(3) by adding at the end the following: 12
139	139	‘‘(C) right or interest in equity securities 13
140	140	of the debtor, or an affiliate of the debtor, if— 14
141	141	‘‘(i) the equity securities are held in a 15
142	142	defined contribution plan (within the 16
143	143	meaning of section 3(34) of the Employee 17
144	144	Retirement Income Security Act of 1974 18
145	145	(29 U.S.C. 1002(34))) for the benefit of 19
146	146	an individual who is not an insider, a sen-20
147	147	ior executive officer, or any of the 20 high-21
148	148	est compensated employees of the debtor 22
149	149	who are not insiders or senior executive of-23
150	150	ficers; 24
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153	153	•S 1381 IS
154	154	‘‘(ii) the equity securities were attrib-1
155	155	utable to either employer contributions by 2
156	156	the debtor or an affiliate of the debtor, or 3
157	157	elective deferrals (within the meaning of 4
158	158	section 402(g) of the Internal Revenue 5
159	159	Code of 1986), and any earnings thereon; 6
160	160	and 7
161	161	‘‘(iii) an employer or plan sponsor 8
162	162	who has commenced a case under this title 9
163	163	has committed fraud with respect to such 10
164	164	plan or has otherwise breached a duty to 11
165	165	the participant that has proximately 12
166	166	caused the loss of value.’’. 13
167	167	SEC. 103. PRIORITY FOR SEVERANCE PAY AND CONTRIBU-14
168	168	TIONS TO EMPLOYEE BENEFIT PLANS. 15
169	169	Section 503(b) of title 11, United States Code, is 16
170	170	amended— 17
171	171	(1) in paragraph (8)(B), by striking ‘‘and’’ at 18
172	172	the end; 19
173	173	(2) in paragraph (9), by striking the period and 20
174	174	inserting a semicolon; and 21
175	175	(3) by adding at the end the following: 22
176	176	‘‘(10) severance pay owed to employees of the 23
177	177	debtor (other than to an insider of the debtor, a sen-24
178	178	ior executive officer of the debtor, the 20 highest 25
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181	181	•S 1381 IS
182	182	compensated employees of the debtor who are not in-1
183	183	siders or senior executive officers, any department or 2
184	184	division manager of the debtor, or any consultant 3
185	185	providing services to the debtor), under a plan, pro-4
186	186	gram, or policy generally applicable to employees of 5
187	187	the debtor (but not under an individual contract of 6
188	188	employment), or owed pursuant to a collective bar-7
189	189	gaining agreement, for layoff or termination on or 8
190	190	after the date of the filing of the petition, which pay 9
191	191	shall be deemed earned in full upon such layoff or 10
192	192	termination of employment; and 11
193	193	‘‘(11) any contribution to an employee benefit 12
194	194	plan that is due on or after the date of the filing of 13
195	195	the petition.’’. 14
196	196	SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RE-15
197	197	TIREES. 16
198	198	Section 1129(a) of title 11, United States Code is 17
199	199	amended— 18
200	200	(1) by striking paragraph (13) and inserting 19
201	201	the following: 20
202	202	‘‘(13) With respect to retiree benefits, as that 21
203	203	term is defined in section 1114(a), the plan— 22
204	204	‘‘(A) provides for the continuation after 23
205	205	the effective date of the plan of payment of all 24
206	206	retiree benefits at the level established pursuant 25
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209	209	•S 1381 IS
210	210	to subsection (e)(1)(B) or (g) of section 1114 1
211	211	at any time before the date of confirmation of 2
212	212	the plan, for the duration of the period for 3
213	213	which the debtor has obligated itself to provide 4
214	214	such benefits, or if no modifications are made 5
215	215	before confirmation of the plan, the continu-6
216	216	ation of all such retiree benefits maintained or 7
217	217	established in whole or in part by the debtor be-8
218	218	fore the date of the filing of the petition; and 9
219	219	‘‘(B) provides for recovery of claims arising 10
220	220	from the modification of retiree benefits or for 11
221	221	other financial returns, as negotiated by the 12
222	222	debtor and the authorized representative (to the 13
223	223	extent that such returns are paid under, rather 14
224	224	than outside of, a plan).’’; and 15
225	225	(2) by adding at the end the following: 16
226	226	‘‘(17) The plan provides for recovery of dam-17
227	227	ages payable for the rejection of a collective bar-18
228	228	gaining agreement, or for other financial returns as 19
229	229	negotiated by the debtor and the authorized rep-20
230	230	resentative under section 1113 (to the extent that 21
231	231	such returns are paid under, rather than outside of, 22
232	232	a plan).’’. 23
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235	235	•S 1381 IS
236	236	SEC. 105. PRIORITY FOR WARN ACT DAMAGES. 1
237	237	Section 503(b)(1)(A)(ii) of title 11, United States 2
238	238	Code is amended by inserting ‘‘any back pay, civil penalty, 3
239	239	or damages for a violation of any Federal or State labor 4
240	240	and employment law, including the Worker Adjustment 5
241	241	and Retraining Notification Act (29 U.S.C. 2101 et seq.) 6
242	242	and any comparable State law, and’’ before ‘‘wages and 7
243	243	benefits’’ each place that term appears. 8
244	244	TITLE II—REDUCING EMPLOY-9
245	245	EES’ AND RETIREES’ LOSSES 10
246	246	SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREE-11
247	247	MENTS. 12
248	248	Section 1113 of title 11, United States Code, is 13
249	249	amended by striking subsections (a) through (f) and in-14
250	250	serting the following: 15
251	251	‘‘(a) The debtor in possession, or the trustee if one 16
252	252	has been appointed under this chapter, other than as pro-17
253	253	vided in section 103(m) for collective bargaining agree-18
254	254	ments covered by the Railway Labor Act (45 U.S.C. 151 19
255	255	et seq.), may reject a collective bargaining agreement only 20
256	256	in accordance with this section. In this section, a reference 21
257	257	to the trustee includes the debtor in possession. 22
258	258	‘‘(b) No provision of this title shall be construed to 23
259	259	permit the trustee to unilaterally terminate or alter any 24
260	260	provision of a collective bargaining agreement before com-25
261	261	plying with this section. The trustee shall timely pay all 26
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264	264	•S 1381 IS
265	265	monetary obligations arising under the terms of the collec-1
266	266	tive bargaining agreement. Any such payment required to 2
267	267	be made before a plan confirmed under section 1129 is 3
268	268	effective has the status of an allowed administrative ex-4
269	269	pense under section 503. 5
270	270	‘‘(c)(1) If the trustee seeks modification of a collec-6
271	271	tive bargaining agreement, the trustee shall provide notice 7
272	272	to the labor organization representing the employees cov-8
273	273	ered by the collective bargaining agreement that modifica-9
274	274	tions are being proposed under this section, and shall 10
275	275	promptly provide an initial proposal for modifications to 11
276	276	the collective bargaining agreement. Thereafter, the trust-12
277	277	ee shall confer in good faith with the labor organization, 13
278	278	at reasonable times and for a reasonable period in light 14
279	279	of the complexity of the case, in attempting to reach mutu-15
280	280	ally acceptable modifications of the collective bargaining 16
281	281	agreement. 17
282	282	‘‘(2) The initial proposal and subsequent proposals 18
283	283	by the trustee for modification of a collective bargaining 19
284	284	agreement shall be based upon a business plan for the re-20
285	285	organization of the debtor, and shall reflect the most com-21
286	286	plete and reliable information available. The trustee shall 22
287	287	provide to the labor organization all information that is 23
288	288	relevant for negotiations. The court may enter a protective 24
289	289	order to prevent the disclosure of information if disclosure 25
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292	292	•S 1381 IS
293	293	could compromise the position of the debtor with respect 1
294	294	to the competitors in the industry of the debtor, subject 2
295	295	to the needs of the labor organization to evaluate the pro-3
296	296	posals of the trustee and any application for rejection of 4
297	297	the collective bargaining agreement or for interim relief 5
298	298	pursuant to this section. 6
299	299	‘‘(3) In consideration of Federal policy encouraging 7
300	300	the practice and process of collective bargaining and in 8
301	301	recognition of the bargained-for expectations of the em-9
302	302	ployees covered by the collective bargaining agreement, 10
303	303	modifications proposed by the trustee— 11
304	304	‘‘(A) shall be proposed only as part of a pro-12
305	305	gram of workforce and nonworkforce cost savings 13
306	306	devised for the reorganization of the debtor, includ-14
307	307	ing savings in management personnel costs; 15
308	308	‘‘(B) shall be limited to modifications designed 16
309	309	to achieve a specified aggregate financial contribu-17
310	310	tion for the employees covered by the collective bar-18
311	311	gaining agreement (taking into consideration any 19
312	312	labor cost savings negotiated within the 12-month 20
313	313	period before the filing of the petition), and shall be 21
314	314	not more than the minimum savings essential to per-22
315	315	mit the debtor to exit bankruptcy, such that con-23
316	316	firmation of a plan of reorganization is not likely to 24
317	317	be followed by the liquidation, or the need for fur-25
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320	320	•S 1381 IS
321	321	ther financial reorganization, of the debtor (or any 1
322	322	successor to the debtor) in the short term; and 2
323	323	‘‘(C) shall not be disproportionate or overly bur-3
324	324	den the employees covered by the collective bar-4
325	325	gaining agreement, either in the amount of the cost 5
326	326	savings sought from such employees or the nature of 6
327	327	the modifications. 7
328	328	‘‘(d)(1) If, after a period of negotiations, the trustee 8
329	329	and the labor organization have not reached an agreement 9
330	330	over mutually satisfactory modifications, and further ne-10
331	331	gotiations are not likely to produce mutually satisfactory 11
332	332	modifications, the trustee may file a motion seeking rejec-12
333	333	tion of the collective bargaining agreement after notice 13
334	334	and a hearing. Absent agreement of the parties, no such 14
335	335	hearing shall be held before the expiration of the 21-day 15
336	336	period beginning on the date on which notice of the hear-16
337	337	ing is provided to the labor organization representing the 17
338	338	employees covered by the collective bargaining agreement. 18
339	339	Only the debtor and the labor organization may appear 19
340	340	and be heard at such hearing. An application for rejection 20
341	341	shall seek rejection effective upon the entry of an order 21
342	342	granting the relief. 22
343	343	‘‘(2) In consideration of Federal policy encouraging 23
344	344	the practice and process of collective bargaining and in 24
345	345	recognition of the bargained-for expectations of the em-25
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348	348	•S 1381 IS
349	349	ployees covered by the collective bargaining agreement, the 1
350	350	court may grant a motion seeking rejection of a collective 2
351	351	bargaining agreement only if, based on clear and con-3
352	352	vincing evidence— 4
353	353	‘‘(A) the court finds that the trustee has com-5
354	354	plied with the requirements of subsection (c); 6
355	355	‘‘(B) the court has considered alternative pro-7
356	356	posals by the labor organization and has concluded 8
357	357	that such proposals do not meet the requirements of 9
358	358	subsection (c)(3)(B); 10
359	359	‘‘(C) the court finds that further negotiations 11
360	360	regarding the proposal of the trustee or an alter-12
361	361	native proposal by the labor organization are not 13
362	362	likely to produce an agreement; 14
363	363	‘‘(D) the court finds that implementation of the 15
364	364	proposal of the trustee shall not— 16
365	365	‘‘(i) cause a material diminution in the 17
366	366	purchasing power of the employees covered by 18
367	367	the collective bargaining agreement; 19
368	368	‘‘(ii) adversely affect the ability of the 20
369	369	debtor to retain an experienced and qualified 21
370	370	workforce; or 22
371	371	‘‘(iii) impair the labor relations of the 23
372	372	debtor such that the ability to achieve a feasible 24
373	373	reorganization would be compromised; and 25
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376	376	•S 1381 IS
377	377	‘‘(E) the court concludes that rejection of the 1
378	378	collective bargaining agreement and immediate im-2
379	379	plementation of the proposal of the trustee is essen-3
380	380	tial to permit the debtor to exit bankruptcy, such 4
381	381	that confirmation of a plan of reorganization is not 5
382	382	likely to be followed by liquidation, or the need for 6
383	383	further financial reorganization, of the debtor (or 7
384	384	any successor to the debtor) in the short term. 8
385	385	‘‘(3) If, during the bankruptcy, the trustee has imple-9
386	386	mented a program of incentive pay, bonuses, or other fi-10
387	387	nancial returns for an insider of the debtor, a senior exec-11
388	388	utive officer of the debtor, any of the 20 highest com-12
389	389	pensated employees of the debtor who are not insiders or 13
390	390	senior executive officers, any department or division man-14
391	391	ager of the debtor, or any consultant providing services 15
392	392	to the debtor, or such a program was implemented within 16
393	393	180 days before the date of the filing of the petition, the 17
394	394	court shall presume that the trustee has failed to satisfy 18
395	395	the requirements of subsection (c)(3)(C). 19
396	396	‘‘(4) In no case shall the court enter an order reject-20
397	397	ing a collective bargaining agreement that would result in 21
398	398	modifications to a level lower than the level proposed by 22
399	399	the trustee in the proposal found by the court to have com-23
400	400	plied with the requirements of this section. 24
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403	403	•S 1381 IS
404	404	‘‘(5) At any time after the date on which an order 1
405	405	rejecting a collective bargaining agreement is entered, or 2
406	406	in the case of a collective bargaining agreement entered 3
407	407	into between the trustee and the labor organization pro-4
408	408	viding mutually satisfactory modifications, at any time 5
409	409	after that collective bargaining agreement has been en-6
410	410	tered into, the labor organization may apply to the court 7
411	411	for an order seeking an increase in the level of wages or 8
412	412	benefits, or relief from working conditions, based upon 9
413	413	changed circumstances. The court shall grant the request 10
414	414	only if the increase or other relief is not inconsistent with 11
415	415	the standard set forth in paragraph (2)(E). 12
416	416	‘‘(e) During a period during which a collective bar-13
417	417	gaining agreement at issue under this section continues 14
418	418	in effect and a motion for rejection of the collective bar-15
419	419	gaining agreement has been filed, if essential to the con-16
420	420	tinuation of the business of the debtor or in order to avoid 17
421	421	irreparable damage to the estate, the court, after notice 18
422	422	and a hearing, may authorize the trustee to implement 19
423	423	interim changes in the terms, conditions, wages, benefits, 20
424	424	or work rules provided by the collective bargaining agree-21
425	425	ment. Any hearing under this subsection shall be sched-22
426	426	uled in accordance with the needs of the trustee. The im-23
427	427	plementation of such interim changes shall not render the 24
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430	430	•S 1381 IS
431	431	application for rejection moot and may be authorized for 1
432	432	not more than 14 days in total. 2
433	433	‘‘(f)(1) Rejection of a collective bargaining agreement 3
434	434	constitutes a breach of the collective bargaining agree-4
435	435	ment, and shall be effective no earlier than the entry of 5
436	436	an order granting such relief. 6
437	437	‘‘(2) Notwithstanding paragraph (1), solely for pur-7
438	438	poses of determining and allowing a claim arising from 8
439	439	the rejection of a collective bargaining agreement, rejec-9
440	440	tion shall be treated as rejection of an executory contract 10
441	441	under section 365(g) and shall be allowed or disallowed 11
442	442	in accordance with section 502(g)(1). No claim for rejec-12
443	443	tion damages shall be limited by section 502(b)(7). Eco-13
444	444	nomic self-help by a labor organization shall be permitted 14
445	445	upon a court order granting a motion to reject a collective 15
446	446	bargaining agreement under subsection (d) or pursuant to 16
447	447	subsection (e), and no provision of this title or of any other 17
448	448	provision of Federal or State law may be construed to the 18
449	449	contrary. 19
450	450	‘‘(g) The trustee shall provide for the reasonable fees 20
451	451	and costs incurred by a labor organization under this sec-21
452	452	tion, upon request and after notice and a hearing. 22
453	453	‘‘(h) A collective bargaining agreement that is as-23
454	454	sumed shall be assumed in accordance with section 365.’’. 24
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457	457	•S 1381 IS
458	458	SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED 1
459	459	EMPLOYEES. 2
460	460	Section 1114 of title 11, United States Code, is 3
461	461	amended— 4
462	462	(1) in subsection (a), by inserting ‘‘, without re-5
463	463	gard to whether the debtor asserts a right to unilat-6
464	464	erally modify such payments under such plan, fund, 7
465	465	or program’’ before the period at the end; 8
466	466	(2) in subsection (b)(2), by inserting ‘‘, and a 9
467	467	labor organization serving as the authorized rep-10
468	468	resentative under subsection (c)(1),’’ after ‘‘section’’; 11
469	469	(3) by striking subsection (f) and inserting the 12
470	470	following: 13
471	471	‘‘(f)(1) If a trustee seeks modification of retiree bene-14
472	472	fits, the trustee shall provide a notice to the authorized 15
473	473	representative that modifications are being proposed pur-16
474	474	suant to this section, and shall promptly provide an initial 17
475	475	proposal. Thereafter, the trustee shall confer in good faith 18
476	476	with the authorized representative at reasonable times and 19
477	477	for a reasonable period in light of the complexity of the 20
478	478	case in attempting to reach mutually satisfactory modi-21
479	479	fications. 22
480	480	‘‘(2) The initial proposal and subsequent proposals 23
481	481	by the trustee shall be based upon a business plan for the 24
482	482	reorganization of the debtor and shall reflect the most 25
483	483	complete and reliable information available. The trustee 26
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486	486	•S 1381 IS
487	487	shall provide to the authorized representative all informa-1
488	488	tion that is relevant for the negotiations. The court may 2
489	489	enter a protective order to prevent the disclosure of infor-3
490	490	mation if disclosure could compromise the position of the 4
491	491	debtor with respect to the competitors in the industry of 5
492	492	the debtor, subject to the needs of the authorized rep-6
493	493	resentative to evaluate the proposals of the trustee and 7
494	494	an application pursuant to subsection (g) or (h). 8
495	495	‘‘(3) Modifications proposed by the trustee— 9
496	496	‘‘(A) shall be proposed only as part of a pro-10
497	497	gram of workforce and nonworkforce cost savings 11
498	498	devised for the reorganization of the debtor, includ-12
499	499	ing savings in management personnel costs; 13
500	500	‘‘(B) shall be limited to modifications that are 14
501	501	designed to achieve a specified aggregate financial 15
502	502	contribution for the retiree group represented by the 16
503	503	authorized representative (taking into consideration 17
504	504	any cost savings implemented within the 12-month 18
505	505	period before the date of filing of the petition with 19
506	506	respect to the retiree group), and shall be no more 20
507	507	than the minimum savings essential to permit the 21
508	508	debtor to exit bankruptcy, such that confirmation of 22
509	509	a plan of reorganization is not likely to be followed 23
510	510	by the liquidation, or the need for further financial 24
511	511	VerDate Sep 11 2014 03:11 Apr 18, 2025 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S1381.IS S1381
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513	513	•S 1381 IS
514	514	reorganization, of the debtor (or any successor to 1
515	515	the debtor) in the short term; and 2
516	516	‘‘(C) shall not be disproportionate or overly bur-3
517	517	den the retiree group, either in the amount of the 4
518	518	cost savings sought from such group or the nature 5
519	519	of the modifications.’’; 6
520	520	(4) in subsection (g)— 7
521	521	(A) by striking the subsection designation 8
522	522	and all that follows through the semicolon at 9
523	523	the end of paragraph (3) and inserting the fol-10
524	524	lowing: 11
525	525	‘‘(g)(1) If, after a period of negotiations, the trustee 12
526	526	and the authorized representative have not reached agree-13
527	527	ment over mutually satisfactory modifications and further 14
528	528	negotiations are not likely to produce mutually satisfac-15
529	529	tory modifications, the trustee may file a motion seeking 16
530	530	modifications in the payment of retiree benefits after no-17
531	531	tice and a hearing. Absent agreement of the parties, no 18
532	532	such hearing shall be held before the expiration of the 21- 19
533	533	day period beginning on the date on which notice of the 20
534	534	hearing is provided to the authorized representative. Only 21
535	535	the debtor and the authorized representative may appear 22
536	536	and be heard at such hearing. 23
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539	539	•S 1381 IS
540	540	‘‘(2) The court may grant a motion to modify the 1
541	541	payment of retiree benefits only if, based on clear and con-2
542	542	vincing evidence— 3
543	543	‘‘(A) the court finds that the trustee has com-4
544	544	plied with the requirements of subsection (f); 5
545	545	‘‘(B) the court has considered alternative pro-6
546	546	posals by the authorized representative and has de-7
547	547	termined that such proposals do not meet the re-8
548	548	quirements of subsection (f)(3)(B); 9
549	549	‘‘(C) the court finds that further negotiations 10
550	550	regarding the proposal of the trustee or an alter-11
551	551	native proposal by the authorized representative are 12
552	552	not likely to produce a mutually satisfactory agree-13
553	553	ment; 14
554	554	‘‘(D) the court finds that implementation of the 15
555	555	proposal shall not cause irreparable harm to the af-16
556	556	fected retirees; and 17
557	557	‘‘(E) the court concludes that an order granting 18
558	558	the motion and immediate implementation of the 19
559	559	proposal of the trustee is essential to permit the 20
560	560	debtor to exit bankruptcy, such that confirmation of 21
561	561	a plan of reorganization is not likely to be followed 22
562	562	by liquidation, or the need for further financial reor-23
563	563	ganization, of the debtor (or a successor to the debt-24
564	564	or) in the short term. 25
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567	567	•S 1381 IS
568	568	‘‘(3) If, during the bankruptcy, a trustee has imple-1
569	569	mented a program of incentive pay, bonuses, or other fi-2
570	570	nancial returns for insiders of the debtor, senior executive 3
571	571	officers of the debtor, the 20 highest compensated employ-4
572	572	ees of the debtor who are not insiders or senior executive 5
573	573	officers, any department or division managers of the debt-6
574	574	or, or any consultants providing services to the debtor, or 7
575	575	such a program was implemented within 180 days before 8
576	576	the date of the filing of the petition, the court shall pre-9
577	577	sume that the trustee has failed to satisfy the require-10
578	578	ments of subsection (f)(3)(C).’’; and 11
579	579	(B) in the matter following paragraph 12
580	580	(3)— 13
581	581	(i) by striking ‘‘except that in no 14
582	582	case’’ and inserting the following: 15
583	583	‘‘(4) In no case’’; and 16
584	584	(ii) by striking ‘‘is consistent with the 17
585	585	standard set forth in paragraph (3)’’ and 18
586	586	inserting ‘‘assures that all creditors, the 19
587	587	debtor, and all of the affected parties are 20
588	588	treated fairly and equitably, and is clearly 21
589	589	favored by the balance of the equities’’; 22
590	590	(5) in subsection (h)(1), by inserting ‘‘for a pe-23
591	591	riod of not longer than 14 days’’ before the period; 24
592	592	and 25
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595	595	•S 1381 IS
596	596	(6) by striking subsection (k) and redesignating 1
597	597	subsections (l) and (m) as subsections (k) and (l), 2
598	598	respectively. 3
599	599	SEC. 203. PROTECTION OF EMPLOYEE BENEFITS IN A SALE 4
600	600	OF ASSETS. 5
601	601	(a) R
602	602	EQUIREMENTTOPRESERVEJOBS ANDMAIN-6
603	603	TAINTERMS ANDCONDITIONS OFEMPLOYMENT.—Sec-7
604	604	tion 363 of title 11, United States Code, is amended by 8
605	605	adding at the end the following: 9
606	606	‘‘(q)(1) In approving a sale or lease of property of 10
607	607	the estate under this section or a plan under chapter 11, 11
608	608	the court shall give substantial weight to the extent to 12
609	609	which a prospective purchaser or lessee of the property 13
610	610	will— 14
611	611	‘‘(A) preserve the jobs of the employees of the 15
612	612	debtor; 16
613	613	‘‘(B) maintain the terms and conditions of em-17
614	614	ployment of the employees of the debtor; and 18
615	615	‘‘(C) assume or match the pension and health 19
616	616	benefit obligations of the debtor to the retirees of 20
617	617	the debtor. 21
618	618	‘‘(2) If there are two or more offers to purchase or 22
619	619	lease property of the estate under this section or a plan 23
620	620	under chapter 11, the court shall approve the offer of the 24
621	621	prospective purchaser or lessee that will best carry out the 25
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624	624	•S 1381 IS
625	625	actions described in subparagraphs (A) through (C) of 1
626	626	paragraph (1).’’. 2
627	627	(b) C
628	628	HAPTER11 PLANS.—Section 1129(a) of title 3
629	629	11, United States Code is amended by adding at the end 4
630	630	the following: 5
631	631	‘‘(17) If the plan provides for the sale of all or 6
632	632	substantially all of the property of the estate, the 7
633	633	plan requires the purchaser of the sale to carry out 8
634	634	the actions described in subparagraphs (A) through 9
635	635	(C) of section 363(q)(1).’’. 10
636	636	SEC. 204. CLAIM FOR PENSION LOSSES. 11
637	637	Section 502 of title 11, United States Code, is 12
638	638	amended by adding at the end the following: 13
639	639	‘‘(l) The court shall allow a claim asserted by an ac-14
640	640	tive or retired participant, or by a labor organization rep-15
641	641	resenting such participants, in a defined benefit plan ter-16
642	642	minated under section 4041 or 4042 of the Employee Re-17
643	643	tirement Income Security Act of 1974 (29 U.S.C. 1341, 18
644	644	1342), for any shortfall in pension benefits accrued as of 19
645	645	the effective date of the termination of such pension plan 20
646	646	as a result of the termination of the plan and limitations 21
647	647	upon the payment of benefits imposed pursuant to section 22
648	648	4022 of that Act (29 U.S.C. 1322), notwithstanding any 23
649	649	claim asserted and collected by the Pension Benefit Guar-24
650	650	anty Corporation with respect to such termination. 25
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653	653	•S 1381 IS
654	654	‘‘(m) The court shall allow a claim of a kind described 1
655	655	in section 101(5)(C) by an active or retired participant 2
656	656	in a defined contribution plan (within the meaning of sec-3
657	657	tion 3(34) of the Employee Retirement Income Security 4
658	658	Act of 1974 (29 U.S.C. 1002(34))), or by a labor organi-5
659	659	zation representing such participants. The amount of such 6
660	660	claim shall be measured by the market value of the stock 7
661	661	at the time of contribution to, or purchase by, the plan 8
662	662	and the value as of the commencement of the case.’’. 9
663	663	SEC. 205. PAYMENTS BY SECURED LENDER. 10
664	664	Section 506(c) of title 11, United States Code, is 11
665	665	amended— 12
666	666	(1) by adding ‘‘(1)’’ after ‘‘(c)’’; and 13
667	667	(2) by adding at the end the following: 14
668	668	‘‘(2) If one or more employees of the debtor have not 15
669	669	received wages, accrued vacation, severance, or any other 16
670	670	compensation owed under a plan, program, policy or prac-17
671	671	tice of the debtor, or pursuant to the terms of a collective 18
672	672	bargaining agreement, for services rendered on or after 19
673	673	the date of the commencement of the case, or the debtor 20
674	674	has not made a contribution due under an employee ben-21
675	675	efit plan on or after the date of the commencement of the 22
676	676	case, such unpaid obligations shall be deemed reasonable, 23
677	677	necessary costs and expenses of preserving, or disposing 24
678	678	of, property securing an allowed secured claim and benefit-25
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680	680	kjohnson on DSK7ZCZBW3PROD with $$_JOB 25
681	681	•S 1381 IS
682	682	ting the holder of the allowed secured claim, and shall be 1
683	683	recovered by the trustee for payment to the employees or 2
684	684	the employee benefit plan, as applicable, even if the trust-3
685	685	ee, or a successor or predecessor in interest has otherwise 4
686	686	waived the provisions of this subsection under an agree-5
687	687	ment with the holder of the allowed secured claim or a 6
688	688	successor or predecessor in interest.’’. 7
689	689	SEC. 206. PRESERVATION OF JOBS AND BENEFITS. 8
690	690	Chapter 11 of title 11, United States Code, is amend-9
691	691	ed— 10
692	692	(1) by inserting before section 1101 the fol-11
693	693	lowing: 12
694	694	‘‘§ 1100. Statement of purpose 13
695	695	‘‘A case under this chapter involving a debtor that 14
696	696	is not an individual shall have as its principal purpose the 15
697	697	reorganization of its business to preserve going concern 16
698	698	value to the maximum extent possible through the produc-17
699	699	tive use of its assets and the preservation of jobs that will 18
700	700	sustain productive economic activity.’’; 19
701	701	(2) in section 1129— 20
702	702	(A) in subsection (a), as amended by sec-21
703	703	tion 104 of this Act, by adding at the end the 22
704	704	following: 23
705	705	‘‘(18) If the plan contemplates continuation of 24
706	706	the debtor’s business, the proponent of the plan has 25
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709	709	•S 1381 IS
710	710	demonstrated that the reorganization preserves 1
711	711	going concern value to the maximum extent possible 2
712	712	through the productive use of the assets of the debt-3
713	713	or and preserves jobs that sustain productive eco-4
714	714	nomic activity.’’; and 5
715	715	(B) in subsection (c)— 6
716	716	(i) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 7
717	717	(ii) by striking the last sentence and 8
718	718	inserting the following: 9
719	719	‘‘(2) If the requirements of subsections (a) and (b) 10
720	720	are met with respect to more than 1 plan, the court shall, 11
721	721	in determining which plan to confirm— 12
722	722	‘‘(A) consider the extent to which each plan 13
723	723	would preserve going concern value through the pro-14
724	724	ductive use of the assets of the debtor and the pres-15
725	725	ervation of jobs that sustain productive economic ac-16
726	726	tivity; and 17
727	727	‘‘(B) confirm the plan that better serves such 18
728	728	interests. 19
729	729	‘‘(3) A plan that incorporates the terms of a settle-20
730	730	ment with a labor organization representing employees of 21
731	731	the debtor shall presumptively constitute the plan that sat-22
732	732	isfies this subsection.’’; and 23
733	733	(3) in the table of sections, by inserting before 24
734	734	the item relating to section 1101 the following: 25
735	735	‘‘1100. Statement of purpose.’’.
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738	738	•S 1381 IS
739	739	SEC. 207. TERMINATION OF EXCLUSIVITY. 1
740	740	Section 1121(d) of title 11, United States Code, is 2
741	741	amended by adding at the end the following: 3
742	742	‘‘(3) For purposes of this subsection, cause for reduc-4
743	743	ing the 120-day period or the 180-day period includes— 5
744	744	‘‘(A) the filing of a motion pursuant to section 6
745	745	1113 seeking rejection of a collective bargaining 7
746	746	agreement if a plan based upon an alternative pro-8
747	747	posal by the labor organization is reasonably likely 9
748	748	to be confirmed within a reasonable time; and 10
749	749	‘‘(B) the proposed filing of a plan by a pro-11
750	750	ponent other than the debtor, which incorporates the 12
751	751	terms of a settlement with a labor organization if 13
752	752	such plan is reasonably likely to be confirmed within 14
753	753	a reasonable time.’’. 15
754	754	SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY. 16
755	755	Section 503(b) of title 11, United States Code, as 17
756	756	amended by section 103 of this Act, is amended by adding 18
757	757	at the end the following: 19
758	758	‘‘(12) with respect to withdrawal liability owed 20
759	759	to a multi-employer pension plan for a complete or 21
760	760	partial withdrawal pursuant to section 4201 of the 22
761	761	Employee Retirement Income Security Act of 1974 23
762	762	(29 U.S.C. 1381) where such withdrawal occurs on 24
763	763	or after the commencement of the case, an amount 25
764	764	equal to the total benefits payable from such pension 26
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767	767	•S 1381 IS
768	768	plan that accrued as a result of employees’ services 1
769	769	rendered to the debtor during the period beginning 2
770	770	on the date of commencement of the case and end-3
771	771	ing on the date of the withdrawal from the plan.’’. 4
772	772	TITLE III—RESTRICTING EXECU-5
773	773	TIVE COMPENSATION PRO-6
774	774	GRAMS 7
775	775	SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM 8
776	776	BANKRUPTCY. 9
777	777	Section 1129(a) of title 11, United States Code, as 10
778	778	amended by sections 104 and 206 of this Act, is amend-11
779	779	ed— 12
780	780	(1) in paragraph (4)— 13
781	781	(A) by adding ‘‘(A)’’ after ‘‘(4)’’; 14
782	782	(B) in subparagraph (A), as so designated, 15
783	783	by striking ‘‘Any payment’’ and inserting ‘‘Sub-16
784	784	ject to subparagraph (B), any payment’’; and 17
785	785	(C) by adding at the end the following: 18
786	786	‘‘(B)(i) Subject to clause (ii), the plan does not 19
787	787	provide for payments or other distributions to, or for 20
788	788	the benefit of, an insider of the debtor, a senior ex-21
789	789	ecutive officer of the debtor, any of the 20 highest 22
790	790	compensated employees of the debtor who are not in-23
791	791	siders or senior executive officers, any department or 24
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794	794	•S 1381 IS
795	795	division manager of the debtor, or any consultant 1
796	796	providing services to the debtor, unless— 2
797	797	‘‘(I) the payments or other distributions 3
798	798	are part of a program that is generally applica-4
799	799	ble to all full-time employees of the debtor; and 5
800	800	‘‘(II) the payments or distributions do not 6
801	801	exceed the compensation limits established in 7
802	802	section 503(c)(1) in comparison to the non-8
803	803	management workforce of the debtor. 9
804	804	‘‘(ii) The requirement under clause (i) shall not 10
805	805	apply to the compensation described in paragraph 11
806	806	(5)(C).’’; and 12
807	807	(2) in paragraph (5)— 13
808	808	(A) in subparagraph (A)(ii), by striking 14
809	809	‘‘and’’ at the end; 15
810	810	(B) in subparagraph (B), by striking the 16
811	811	period at the end and inserting ‘‘; and’’; and 17
812	812	(C) by adding at the end the following: 18
813	813	‘‘(C) the compensation disclosed under subpara-19
814	814	graph (B) has been approved by, or is subject to the 20
815	815	approval of, the court as— 21
816	816	‘‘(i) reasonable when compared to individ-22
817	817	uals holding comparable positions at com-23
818	818	parable companies in the same industry as the 24
819	819	debtor; and 25
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822	822	•S 1381 IS
823	823	‘‘(ii) not excessive or disproportionate in 1
824	824	light of economic losses of the nonmanagement 2
825	825	workforce of the debtor.’’. 3
826	826	SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION EN-4
827	827	HANCEMENTS. 5
828	828	Section 503(c) of title 11, United States Code, is 6
829	829	amended— 7
830	830	(1) in the matter preceding paragraph (1), by 8
831	831	inserting ‘‘and subject to section 363(b)(3)’’ after 9
832	832	‘‘subsection (b)’’; 10
833	833	(2) in paragraph (1)— 11
834	834	(A) in the matter preceding subparagraph 12
835	835	(A)— 13
836	836	(i) by inserting ‘‘, a senior executive 14
837	837	officer of the debtor, any the 20 highest 15
838	838	compensated employees of the debtor who 16
839	839	are not insiders or senior executive officers, 17
840	840	any department or division manager of the 18
841	841	debtor, or any consultant providing serv-19
842	842	ices to the debtor’’ before ‘‘for the pur-20
843	843	pose’’; and 21
844	844	(ii) by inserting ‘‘or for the payment 22
845	845	of performance or incentive compensation, 23
846	846	or a bonus of any kind, or other financial 24
847	847	returns designed to replace or enhance in-25
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850	850	•S 1381 IS
851	851	centive, stock, or other compensation in ef-1
852	852	fect before the date of the commencement 2
853	853	of the case,’’ after ‘‘remain with the debt-3
854	854	or’s business,’’; 4
855	855	(B) by amending subparagraph (A) to read 5
856	856	as follows: 6
857	857	‘‘(A) the transfer or obligation is part of a 7
858	858	program that is generally applicable to all full- 8
859	859	time employees of the debtor; and’’; 9
860	860	(C) by striking subparagraph (B); 10
861	861	(D) by redesignating subparagraph (C) as 11
862	862	subparagraph (B); and 12
863	863	(E) in subparagraph (B), as so redesig-13
864	864	nated— 14
865	865	(i) in clause (i), by striking ‘‘10’’ and 15
866	866	inserting ‘‘2’’; and 16
867	867	(ii) in clause (ii)— 17
868	868	(I) by striking ‘‘25’’ and insert-18
869	869	ing ‘‘10’’; and 19
870	870	(II) by striking ‘‘insider’’ and in-20
871	871	serting ‘‘person’’; 21
872	872	(3) in paragraph (2)— 22
873	873	(A) in the matter preceding subparagraph 23
874	874	(A), by inserting ‘‘, a senior executive officer of 24
875	875	the debtor, any of the 20 highest compensated 25
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878	878	•S 1381 IS
879	879	employees of the debtor who are not insiders or 1
880	880	senior executive officers, any department or di-2
881	881	vision manager of the debtor, or any consultant 3
882	882	providing services to the debtor,’’ before ‘‘, un-4
883	883	less’’; and 5
884	884	(B) in subparagraph (B), by striking ‘‘10’’ 6
885	885	and inserting ‘‘2’’; and 7
886	886	(4) by amending paragraph (3) to read as fol-8
887	887	lows: 9
888	888	‘‘(3) other transfers or obligations to, or for the 10
889	889	benefit of, an insider of the debtor, a senior execu-11
890	890	tive officer of the debtor, the 20 highest com-12
891	891	pensated employees of the debtor who are not insid-13
892	892	ers or senior executive officers, any department or 14
893	893	division manager of the debtor, or any consultant 15
894	894	providing services to the debtor that are outside of 16
895	895	the ordinary course of business, except as part of a 17
896	896	plan of reorganization and subject to the approval of 18
897	897	the court under paragraphs (4) and (5) of section 19
898	898	1129(a).’’. 20
899	899	SEC. 303. PROHIBITION AGAINST SPECIAL COMPENSATION 21
900	900	PAYMENTS. 22
901	901	Section 363 of title 11, United States Code, as 23
902	902	amended by section 203 of this Act, is amended— 24
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905	905	•S 1381 IS
906	906	(1) in subsection (b), by adding at the end the 1
907	907	following: 2
908	908	‘‘(3) No plan, program, or other transfer or obliga-3
909	909	tion to, or for the benefit of, an insider of the debtor, a 4
910	910	senior executive officer of the debtor, the 20 highest com-5
911	911	pensated employees of the debtor who are not insiders or 6
912	912	senior executive officers, any department or division man-7
913	913	ager of the debtor, or any consultant providing services 8
914	914	to the debtor shall be approved if the debtor has, on or 9
915	915	after the date that is 1 year before the date of the filing 10
916	916	of the petition— 11
917	917	‘‘(A) discontinued any plan, program, policy, or 12
918	918	practice of paying severance pay to the nonmanage-13
919	919	ment workforce of the debtor; or 14
920	920	‘‘(B) modified any plan, program, policy, or 15
921	921	practice described in subparagraph (A) in order to 16
922	922	reduce benefits under the plan, program, policy, or 17
923	923	practice.’’; and 18
924	924	(2) in subsection (c)— 19
925	925	(A) in paragraph (1), by striking ‘‘If the 20
926	926	business’’ and inserting ‘‘Except as provided in 21
927	927	paragraph (5), if the business’’; and 22
928	928	(B) by adding at the end the following: 23
929	929	‘‘(5) In the case of a transaction that is a transfer 24
930	930	or obligation described in paragraphs (1) through (3) of 25
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933	933	•S 1381 IS
934	934	section 503(c), the trustee shall obtain the prior approval 1
935	935	of the court after notice and an opportunity for a hear-2
936	936	ing.’’. 3
937	937	SEC. 304. ASSUMPTION OF EXECUTIVE BENEFIT PLANS. 4
938	938	Section 365 of title 11, United States Code, is 5
939	939	amended— 6
940	940	(1) in subsection (a), by striking ‘‘and (d)’’ and 7
941	941	inserting ‘‘(d), (q), and (r)’’; and 8
942	942	(2) by adding at the end the following: 9
943	943	‘‘(q) No deferred compensation arrangement for the 10
944	944	benefit of an insider of the debtor, a senior executive offi-11
945	945	cer of the debtor, or any of the 20 highest compensated 12
946	946	employees of the debtor who are not insiders or senior ex-13
947	947	ecutive officers shall be assumed if a defined benefit plan 14
948	948	for employees of the debtor has been terminated pursuant 15
949	949	to section 4041 or 4042 of the Employee Retirement In-16
950	950	come Security Act of 1974 (29 U.S.C. 1341, 1342), on 17
951	951	or after the date that is 1 year before the date of the com-18
952	952	mencement of the case. 19
953	953	‘‘(r) No plan, fund, program, or contract to provide 20
954	954	retiree benefits for insiders of the debtor, senior executive 21
955	955	officers of the debtor, or the 20 highest compensated em-22
956	956	ployees of the debtor who are not insiders or senior execu-23
957	957	tive officers shall be assumed if the debtor has obtained 24
958	958	relief under subsection (g) or (h) of section 1114 to impose 25
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961	961	•S 1381 IS
962	962	reductions in retiree benefits or under subsection (d) or 1
963	963	(e) of section 1113 to impose reductions in the health ben-2
964	964	efits of active employees of the debtor, or has otherwise 3
965	965	reduced or eliminated health benefits for employees or re-4
966	966	tirees of the debtor on are after the date that is 1 year 5
967	967	before the date of the commencement of the case.’’. 6
968	968	SEC. 305. RECOVERY OF EXECUTIVE COMPENSATION. 7
969	969	(a) I
970	970	NGENERAL.—Subchapter III of chapter 5 of 8
971	971	title 11, United States Code, is amended by inserting after 9
972	972	section 562 the following: 10
973	973	‘‘§ 563. Recovery of executive compensation 11
974	974	‘‘(a) If a debtor has obtained relief under section 12
975	975	1113(d) or section 1114(g), by which the debtor reduces 13
976	976	the cost of its obligations under a collective bargaining 14
977	977	agreement or a plan, fund, or program for retiree benefits 15
978	978	(as defined in section 1114(a)), the court, in granting re-16
979	979	lief, shall determine the percentage diminution in the value 17
980	980	of the obligations when compared to the obligations of the 18
981	981	debtor under the collective bargaining agreement, or with 19
982	982	respect to retiree benefits, as of the date of the commence-20
983	983	ment of the case under this title before granting such re-21
984	984	lief. In making its determination, the court shall include 22
985	985	reductions in benefits, if any, as a result of the termi-23
986	986	nation pursuant to section 4041 or 4042 of the Employee 24
987	987	Retirement Income Security Act of 1974 (29 U.S.C. 1341, 25
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990	990	•S 1381 IS
991	991	1342), of a defined benefit plan administered by the debt-1
992	992	or, or for which the debtor is a contributing employer, ef-2
993	993	fective at any time on or after 180 days before the date 3
994	994	of the commencement of a case under this title. The court 4
995	995	shall not take into account pension benefits paid or pay-5
996	996	able under that Act as a result of any such termination. 6
997	997	‘‘(b) If a defined benefit pension plan administered 7
998	998	by the debtor, or for which the debtor is a contributing 8
999	999	employer, has been terminated pursuant to section 4041 9
1000	1000	or 4042 of the Employee Retirement Income Security Act 10
1001	1001	of 1974 (29 U.S.C. 1341, 1342), effective at any time on 11
1002	1002	or after 180 days before the date of the commencement 12
1003	1003	of a case under this title, but a debtor has not obtained 13
1004	1004	relief under section 1113(d), or section 1114(g), the court, 14
1005	1005	upon motion of a party in interest, shall determine the 15
1006	1006	percentage diminution in the value of benefit obligations 16
1007	1007	when compared to the total benefit liabilities before such 17
1008	1008	termination. The court shall not take into account pension 18
1009	1009	benefits paid or payable under title IV of the Employee 19
1010	1010	Retirement Income Security Act of 1974 (29 U.S.C. 1301 20
1011	1011	et seq.) as a result of any such termination. 21
1012	1012	‘‘(c) Upon the determination of the percentage dimi-22
1013	1013	nution in value under subsection (a) or (b), the estate shall 23
1014	1014	have a claim for the return of the same percentage of the 24
1015	1015	compensation paid, directly or indirectly (including any 25
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1018	1018	•S 1381 IS
1019	1019	transfer to a self-settled trust or similar device, or to a 1
1020	1020	nonqualified deferred compensation plan under section 2
1021	1021	409A(d)(1) of the Internal Revenue Code of 1986) to any 3
1022	1022	officer of the debtor serving as member of the board of 4
1023	1023	directors of the debtor within the year before the date of 5
1024	1024	the commencement of the case, and any individual serving 6
1025	1025	as chairman or lead director of the board of directors at 7
1026	1026	the time of the granting of relief under section 1113 or 8
1027	1027	1114 or, if no such relief has been granted, the termi-9
1028	1028	nation of the defined benefit plan. 10
1029	1029	‘‘(d) The trustee or a committee appointed pursuant 11
1030	1030	to section 1102 may commence an action to recover such 12
1031	1031	claims, except that if neither the trustee nor such com-13
1032	1032	mittee commences an action to recover such claim by the 14
1033	1033	first date set for the hearing on the confirmation of plan 15
1034	1034	under section 1129, any party in interest may apply to 16
1035	1035	the court for authority to recover such claim for the ben-17
1036	1036	efit of the estate. The costs of recovery shall be borne by 18
1037	1037	the estate. 19
1038	1038	‘‘(e) The court shall not award postpetition com-20
1039	1039	pensation under section 503(c) or otherwise to any person 21
1040	1040	subject to subsection (c) of this section if there is a reason-22
1041	1041	able likelihood that such compensation is intended to reim-23
1042	1042	burse or replace compensation recovered by the estate 24
1043	1043	under this section.’’. 25
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1046	1046	•S 1381 IS
1047	1047	(b) TECHNICAL AND CONFORMINGAMENDMENT.— 1
1048	1048	The table of sections for chapter 5 of title 11, United 2
1049	1049	States Code, is amended by inserting after the item relat-3
1050	1050	ing to section 562 the following: 4
1051	1051	‘‘563. Recovery of executive compensation.’’.
1052	1052	SEC. 306. PREFERENTIAL COMPENSATION TRANSFER.
1053	1053	5
1054	1054	Section 547 of title 11, United States Code, is 6
1055	1055	amended by adding at the end the following: 7
1056	1056	‘‘(j)(1) The trustee may, based on reasonable due dili-8
1057	1057	gence in the circumstances of the case, avoid a transfer— 9
1058	1058	‘‘(A) made— 10
1059	1059	‘‘(i) to, or for the benefit of, an insider of 11
1060	1060	the debtor (including an obligation incurred for 12
1061	1061	the benefit of an insider under an employment 13
1062	1062	contract), a senior executive officer of the debt-14
1063	1063	or, the 20 highest compensated employees of 15
1064	1064	the debtor who are not insiders or senior execu-16
1065	1065	tive officers, any department or division man-17
1066	1066	ager of the debtor, or any consultant providing 18
1067	1067	services to the debtor made in anticipation of 19
1068	1068	bankruptcy; or 20
1069	1069	‘‘(ii) in anticipation of bankruptcy to a 21
1070	1070	consultant who is formerly an insider and who 22
1071	1071	is retained to provide services to an entity that 23
1072	1072	becomes a debtor (including an obligation under 24
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1075	1075	•S 1381 IS
1076	1076	a contract to provide services to such entity or 1
1077	1077	to a debtor); and 2
1078	1078	‘‘(B) made or incurred on or within 1 year be-3
1079	1079	fore the filing of the petition. 4
1080	1080	‘‘(2) No provision of subsection (c) shall constitute 5
1081	1081	a defense against the recovery of a transfer described in 6
1082	1082	paragraph (1). 7
1083	1083	‘‘(3) The trustee or a committee appointed pursuant 8
1084	1084	to section 1102 may commence an action to recover a 9
1085	1085	transfer described in paragraph (1), except that, if neither 10
1086	1086	the trustee nor such committee commences an action to 11
1087	1087	recover the transfer by the time of the commencement of 12
1088	1088	a hearing on the confirmation of a plan under section 13
1089	1089	1129, any party in interest may apply to the court for 14
1090	1090	authority to recover the claims for the benefit of the es-15
1091	1091	tate. The costs of recovery shall be borne by the estate.’’. 16
1092	1092	TITLE IV—OTHER PROVISIONS 17
1093	1093	SEC. 401. UNION PROOF OF CLAIM. 18
1094	1094	Section 501(a) of title 11, United States Code, is 19
1095	1095	amended by inserting ‘‘, including a labor organization,’’ 20
1096	1096	after ‘‘A creditor’’. 21
1097	1097	SEC. 402. EXCEPTION FROM AUTOMATIC STAY. 22
1098	1098	Section 362(b) of title 11, United States Code, is 23
1099	1099	amended— 24
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1102	1102	•S 1381 IS
1103	1103	(1) in paragraph (28), by striking ‘‘and’’ at the 1
1104	1104	end; 2
1105	1105	(2) in paragraph (29), by striking the period at 3
1106	1106	the end and inserting ‘‘; and’’; and 4
1107	1107	(3) by inserting after paragraph (29) the fol-5
1108	1108	lowing: 6
1109	1109	‘‘(30) of the commencement or continuation of 7
1110	1110	a grievance, arbitration, or similar dispute resolution 8
1111	1111	proceeding established by a collective bargaining 9
1112	1112	agreement that was or could have been commenced 10
1113	1113	against the debtor before the filing of a case under 11
1114	1114	this title, or the payment or enforcement of an 12
1115	1115	award or settlement under such proceeding.’’. 13
1116	1116	SEC. 403. EFFECT ON COLLECTIVE BARGAINING AGREE-14
1117	1117	MENTS UNDER THE RAILWAY LABOR ACT. 15
1118	1118	Section 103 of title 11, United States Code, is 16
1119	1119	amended by adding at the end the following: 17
1120	1120	‘‘(m) Notwithstanding sections 365, 1113, or 1114, 18
1121	1121	neither the court nor the trustee may change the wages, 19
1122	1122	working conditions, or retirement benefits of an employee 20
1123	1123	or a retiree of the debtor established by a collective bar-21
1124	1124	gaining agreement that is subject to the Railway Labor 22
1125	1125	Act (45 U.S.C. 151 et seq.), except in accordance with 23
1126	1126	section 6 of that Act (45 U.S.C. 156).’’. 24
1127	1127	Æ
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