Protecting Employees and Retirees in Business Bankruptcies Act of 2012 - Amends federal bankruptcy law governing expenses and claims to increase to $20,000: (1) allowed unsecured claims in the fourth order of priority (wages, salaries, or commissions); and (2) the factor multiplied by the number of employees covered with respect to employee benefit plan contributions in the fifth order of priority.
Includes within the scope of a claim in bankruptcy certain equity securities held in a defined contribution plan for the benefit of certain individuals, but only if an employer or plan sponsor who has commenced a case in bankruptcy has committed fraud regarding the plan or has otherwise breached a duty to the participant that has proximately caused the loss of value.
Allows as an administrative expense of the estate: (1) severance pay owed to certain employees of the debtor for layoff or termination (which pay shall be deemed earned in full), and (2) damages as a result of violation of law by the debtor.
Includes among prerequisites for confirmation of a business reorganization bankruptcy plan (Chapter 11) provision for: (1) recovery of damages payable for the rejection of a collective bargaining agreement, or other financial returns as negotiated by the debtor and the authorized representative; (2) continued payment of retiree benefits maintained or established by the debtor before the petition filing date if no modifications are made before confirmation of the plan; and (3) recovery of claims arising from the modification of retiree benefits or for certain financial returns, as negotiated by the debtor and the authorized representative.
Revises requirements governing: (1) rejection of collective bargaining agreements; (2) payment of insurance benefits to retired employees, including benefit modifications proposed by the trustee; and (3) a trustee's administrative power to dispose of property. Requires the court, in approving a sale of business assets, to consider the extent to which a bidder has offered to maintain existing jobs, preserve terms and conditions of employment, and assume or match pension and retiree health benefit obligations in determining whether an offer constitutes the highest or best offer for such property.
Requires the bankruptcy court to allow certain claims asserted by an active or retired participant, or by a labor organization representing such participant, for any shortfall in pension benefits accrued as a result of the termination of the plan and limitations upon the payment of certain statutory benefits.
States that, if employees have not received wages and benefits for services rendered on and after the date of the commencement of the case in bankruptcy, such unpaid obligations shall be deemed necessary costs and expenses of preserving, or disposing of, property securing an allowed secured claim and shall be recovered even if the trustee has otherwise waived certain provisions under an agreement with the holder of the allowed secured claim.
Allows reduction of a debtor's time frame for filing a Chapter 11 bankruptcy plan in the event of: (1) the filing of a motion seeking rejection of a collective bargaining agreement if a plan based upon an alternative proposal by the labor organization is reasonably likely to be confirmed within a reasonable time; or (2) the proposed filing of a plan by a proponent other than the debtor, which incorporates the terms of a settlement with a labor organization, if such plan is reasonably likely to be confirmed within a reasonable time.
Modifies requirements for confirmation of a Chapter 11 bankruptcy plan to prohibit approval of: (1) payments or other distributions for the benefit of insiders, senior executive officers, and certain highly compensated employees or consultants providing services to the debtor, except as part of those generally applicable to the debtor's employees if the court determines that such payments are not excessive or disproportionate compared to distributions to the debtor's nonmanagement workforce; and (2) insider compensation unless approved by the court as reasonable according to specified criteria.
Restricts: (1) certain executive compensation enhancements as part of the allowance of administrative expenses; (2) trustee assumption of certain deferred compensation arrangements for the benefit of insiders, senior executive officers, or certain highly compensated employees of the debtor; and (3) trustee assumption of retiree benefits for insiders, senior executive officers, or certain highly compensated employees of the debtor if the debtor has obtained relief to impose reductions in retiree benefits, or health benefits of active employees of the debtor, or has reduced or eliminated health benefits for active or retired employees within 180 days before the date of the commencement of the case.
Requires the court, where a debtor has obtained relief by which it reduces the cost of its obligations under a collective bargaining agreement or a retiree plan, fund, or program of retiree benefits, to determine before granting relief the percentage diminution in the value of the obligations when compared to the debtor's obligations under the collective bargaining agreement, or with respect to retiree benefits.
Authorizes the trustee in bankruptcy to avoid a transfer made in anticipation of bankruptcy to or for the benefit of an insider, including certain consultants who were formerly insiders and who are retained to provide services to an entity that becomes a debtor.
Grants a labor organization creditor status for purposes of filing a proof of claim.
Declares that the filing of a petition for relief does not operate as an automatic stay of the commencement or continuation of a dispute resolution proceeding established by a collective bargaining agreement that was or could have been commenced against the debtor before the filing of a petition, including payment or enforcement of an award or settlement under such proceeding.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6117 Introduced in House (IH)]
112th CONGRESS
2d Session
H. R. 6117
To amend title 11, United States Code, to improve protections for
employees and retirees in business bankruptcies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 12, 2012
Mr. Conyers (for himself, Mr. Berman, Mr. Nadler, Ms. Zoe Lofgren of
California, Mr. Cohen, Mr. Johnson of Georgia, Ms. Chu, Ms. Linda T.
Sanchez of California, Ms. Schakowsky, Ms. Norton, Mr. Dingell, Mr.
George Miller of California, Ms. McCollum, Mr. Kucinich, Mr. Capuano,
Mr. Filner, Ms. Lee of California, Mr. Gutierrez, Mr. Doggett, and Mr.
Grijalva) introduced the following bill; which was referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 11, United States Code, to improve protections for
employees and retirees in business bankruptcies.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Protecting
Employees and Retirees in Business Bankruptcies Act of 2012''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
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.
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.
TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS
Sec. 301. Executive compensation upon exit from bankruptcy.
Sec. 302. Limitations on executive compensation enhancements.
Sec. 303. Assumption of executive benefit plans.
Sec. 304. Recovery of executive compensation.
Sec. 305. Preferential compensation transfer.
TITLE IV--OTHER PROVISIONS
Sec. 401. Union proof of claim.
Sec. 402. Exception from automatic stay.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Business bankruptcies have increased sharply in recent
years and remain at high levels. These bankruptcies include
several of the largest business bankruptcy filings in history.
As the use of bankruptcy has expanded, job preservation and
retirement security are placed at greater risk.
(2) Laws enacted to improve recoveries for employees and
retirees and limit their losses in bankruptcy cases have not
kept pace with the increasing and broader use of bankruptcy by
businesses in all sectors of the economy. However, while
protections for employees and retirees in bankruptcy cases have
eroded, management compensation plans devised for those in
charge of troubled businesses have become more prevalent and
are escaping adequate scrutiny.
(3) Changes in the law regarding these matters are urgently
needed as bankruptcy is used to address increasingly more
complex and diverse conditions affecting troubled businesses
and industries.
TITLE I--IMPROVING RECOVERIES FOR EMPLOYEES AND RETIREES
SEC. 101. INCREASED WAGE PRIORITY.
Section 507(a) of title 11, United States Code, is amended--
(1) in paragraph (4)--
(A) by striking ``$10,000'' and inserting
``$20,000'';
(B) by striking ``within 180 days''; and
(C) by striking ``or the date of the cessation of
the debtor's business, whichever occurs first,'';
(2) in paragraph (5)(A), by striking--
(A) ``within 180 days''; and
(B) ``or the date of the cessation of the debtor's
business, whichever occurs first''; and
(3) in paragraph (5), by striking subparagraph (B) and
inserting the following:
``(B) for each such plan, to the extent of the
number of employees covered by each such plan,
multiplied by $20,000.''.
SEC. 102. CLAIM FOR STOCK VALUE LOSSES IN DEFINED CONTRIBUTION PLANS.
Section 101(5) of title 11, United States Code, is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by inserting ``or'' after the
semicolon; and
(3) by adding at the end the following:
``(C) right or interest in equity securities of the
debtor, or an affiliate of the debtor, held in a
defined contribution plan (within the meaning of
section 3(34) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(34))) for the
benefit of an individual who is not an insider, a
senior executive officer, or any of the 20 next most
highly compensated employees of the debtor (if 1 or
more are not insiders), if such securities were
attributable to either employer contributions by the
debtor or an affiliate of the debtor, or elective
deferrals (within the meaning of section 402(g) of the
Internal Revenue Code of 1986), and any earnings
thereon, if an employer or plan sponsor who has
commenced a case under this title has committed fraud
with respect to such plan or has otherwise breached a
duty to the participant that has proximately caused the
loss of value.''.
SEC. 103. PRIORITY FOR SEVERANCE PAY.
Section 503(b) of title 11, United States Code, is amended--
(1) in paragraph (8), by striking ``and'' at the end;
(2) in paragraph (9), by striking the period and inserting
``; and''; and
(3) by adding at the end the following:
``(10) severance pay owed to employees of the debtor (other
than to an insider, other senior management, or a consultant
retained to provide services to the debtor), under a plan,
program, or policy generally applicable to employees of the
debtor (but not under an individual contract of employment), or
owed pursuant to a collective bargaining agreement, for layoff
or termination on or after the date of the filing of the
petition, which pay shall be deemed earned in full upon such
layoff or termination of employment.''.
SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RETIREES.
Section 1129(a) of title 11, United States Code is amended--
(1) by adding at the end the following:
``(17) The plan provides for recovery of damages payable
for the rejection of a collective bargaining agreement, or for
other financial returns as negotiated by the debtor and the
authorized representative under section 1113 (to the extent
that such returns are paid under, rather than outside of, a
plan).''; and
(2) by striking paragraph (13) and inserting the following:
``(13) With respect to retiree benefits, as that term is
defined in section 1114(a), the plan--
``(A) provides for the continuation after its
effective date of payment of all retiree benefits at
the level established pursuant to subsection (e)(1)(B)
or (g) of section 1114 at any time before the date of
confirmation of the plan, for the duration of the
period for which the debtor has obligated itself to
provide such benefits, or if no modifications are made
before confirmation of the plan, the continuation of
all such retiree benefits maintained or established in
whole or in part by the debtor before the date of the
filing of the petition; and
``(B) provides for recovery of claims arising from
the modification of retiree benefits or for other
financial returns, as negotiated by the debtor and the
authorized representative (to the extent that such
returns are paid under, rather than outside of, a
plan).''.
SEC. 105. PRIORITY FOR WARN ACT DAMAGES.
Section 503(b)(1)(A)(ii) of title 11, United States Code is amended
to read as follows:
``(ii) wages and benefits awarded pursuant
to a judicial proceeding or a proceeding of the
National Labor Relations Board as back pay or
damages attributable to any period of time
occurring after the date of commencement of the
case under this title, as a result of a
violation of Federal or State law by the
debtor, without regard to the time of the
occurrence of unlawful conduct on which the
award is based or to whether any services were
rendered on or after the commencement of the
case, including an award by a court under
section 2901 of title 29, United States Code,
of up to 60 days' pay and benefits following a
layoff that occurred or commenced at a time
when such award period includes a period on or
after the commencement of the case, if the
court determines that payment of wages and
benefits by reason of the operation of this
clause will not substantially increase the
probability of layoff or termination of current
employees or of nonpayment of domestic support
obligations during the case under this
title.''.
TITLE II--REDUCING EMPLOYEES' AND RETIREES' LOSSES
SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREEMENTS.
Section 1113 of title 11, United States Code, is amended by
striking subsections (a) through (f) and inserting the following:
``(a) The debtor in possession, or the trustee if one has been
appointed under this chapter, other than a trustee in a case covered by
subchapter IV of this chapter and by title I of the Railway Labor Act,
may reject a collective bargaining agreement only in accordance with
this section. Hereinafter in this section, a reference to the trustee
includes a reference to the debtor in possession.
``(b) No provision of this title shall be construed to permit the
trustee to unilaterally terminate or alter any provision of a
collective bargaining agreement before complying with this section. The
trustee shall timely pay all monetary obligations arising under the
terms of the collective bargaining agreement. Any such payment required
to be made before a plan confirmed under section 1129 is effective has
the status of an allowed administrative expense under section 503.
``(c)(1) If the trustee seeks modification of a collective
bargaining agreement, then the trustee shall provide notice to the
labor organization representing the employees covered by the agreement
that modifications are being proposed under this section, and shall
promptly provide an initial proposal for modifications to the
agreement. Thereafter, the trustee shall confer in good faith with the
labor organization, at reasonable times and for a reasonable period in
light of the complexity of the case, in attempting to reach mutually
acceptable modifications of such agreement.
``(2) The initial proposal and subsequent proposals by the trustee
for modification of a collective bargaining agreement shall be based
upon a business plan for the reorganization of the debtor, and shall
reflect the most complete and reliable information available. The
trustee shall provide to the labor organization all information that is
relevant for negotiations. The court may enter a protective order to
prevent the disclosure of information if disclosure could compromise
the debtor's position with respect to its competitors in the industry,
subject to the needs of the labor organization to evaluate the
trustee's proposals and any application for rejection of the agreement
or for interim relief pursuant to this section.
``(3) In consideration of Federal policy encouraging the practice
and process of collective bargaining and in recognition of the
bargained-for expectations of the employees covered by the agreement,
modifications proposed by the trustee--
``(A) shall be proposed only as part of a program of
workforce and nonworkforce cost savings devised for the
reorganization of the debtor, including savings in management
personnel costs;
``(B) shall be limited to modifications designed to achieve
a specified aggregate financial contribution for the employees
covered by the agreement (taking into consideration any labor
cost savings negotiated within the 12-month period before the
filing of the petition), and shall be not more than the minimum
savings essential to permit the debtor to exit bankruptcy, such
that confirmation of a plan of reorganization is not likely to
be followed by the liquidation, or the need for further
financial reorganization, of the debtor (or any successor to
the debtor) in the short-term; and
``(C) shall not be disproportionate or overly burden the
employees covered by the agreement, either in the amount of the
cost savings sought from such employees or the nature of the
modifications.
``(d)(1) If, after a period of negotiations, the trustee and the
labor organization have not reached an agreement over mutually
satisfactory modifications, and further negotiations are not likely to
produce mutually satisfactory modifications, the trustee may file a
motion seeking rejection of the collective bargaining agreement after
notice and a hearing. Absent agreement of the parties, no such hearing
shall be held before the expiration of the 21-day period beginning on
the date on which notice of the hearing is provided to the labor
organization representing the employees covered by the agreement. Only
the debtor and the labor organization may appear and be heard at such
hearing. An application for rejection shall seek rejection effective
upon the entry of an order granting the relief.
``(2) In consideration of Federal policy encouraging the practice
and process of collective bargaining and in recognition of the
bargained-for expectations of the employees covered by the agreement,
the court may grant a motion seeking rejection of a collective
bargaining agreement only if, based on clear and convincing evidence--
``(A) the court finds that the trustee has complied with
the requirements of subsection (c);
``(B) the court has considered alternative proposals by the
labor organization and has concluded that such proposals do not
meet the requirements of paragraph (3)(B) of subsection (c);
``(C) the court finds that further negotiations regarding
the trustee's proposal or an alternative proposal by the labor
organization are not likely to produce an agreement;
``(D) the court finds that implementation of the trustee's
proposal shall not--
``(i) cause a material diminution in the purchasing
power of the employees covered by the agreement;
``(ii) adversely affect the ability of the debtor
to retain an experienced and qualified workforce; or
``(iii) impair the debtor's labor relations such
that the ability to achieve a feasible reorganization
would be compromised; and
``(E) the court concludes that rejection of the agreement
and immediate implementation of the trustee's proposal is
essential to permit the debtor to exit bankruptcy, such that
confirmation of a plan of reorganization is not likely to be
followed by liquidation, or the need for further financial
reorganization, of the debtor (or any successor to the debtor)
in the short term.
``(3) If the trustee has implemented a program of incentive pay,
bonuses, or other financial returns for insiders, senior executive
officers, or the 20 next most highly compensated employees or
consultants providing services to the debtor during the bankruptcy, or
such a program was implemented within 180 days before the date of the
filing of the petition, the court shall presume that the trustee has
failed to satisfy the requirements of subsection (c)(3)(C).
``(4) In no case shall the court enter an order rejecting a
collective bargaining agreement that would result in modifications to a
level lower than the level proposed by the trustee in the proposal
found by the court to have complied with the requirements of this
section.
``(5) At any time after the date on which an order rejecting a
collective bargaining agreement is entered, or in the case of an
agreement entered into between the trustee and the labor organization
providing mutually satisfactory modifications, at any time after such
agreement has been entered into, the labor organization may apply to
the court for an order seeking an increase in the level of wages or
benefits, or relief from working conditions, based upon changed
circumstances. The court shall grant the request only if the increase
or other relief is not inconsistent with the standard set forth in
paragraph (2)(E).
``(e) During a period in which a collective bargaining agreement at
issue under this section continues in effect, and if essential to the
continuation of the debtor's business or in order to avoid irreparable
damage to the estate, the court, after notice and a hearing, may
authorize the trustee to implement interim changes in the terms,
conditions, wages, benefits, or work rules provided by the collective
bargaining agreement. Any hearing under this subsection shall be
scheduled in accordance with the needs of the trustee. The
implementation of such interim changes shall not render the application
for rejection moot.
``(f) Rejection of a collective bargaining agreement constitutes a
breach of the agreement, and shall be effective no earlier than the
entry of an order granting such relief. Notwithstanding the foregoing,
solely for purposes of determining and allowing a claim arising from
the rejection of a collective bargaining agreement, rejection shall be
treated as rejection of an executory contract under section 365(g) and
shall be allowed or disallowed in accordance with section 502(g)(1). No
claim for rejection damages shall be limited by section 502(b)(7).
Economic self-help by a labor organization shall be permitted upon a
court order granting a motion to reject a collective bargaining
agreement under subsection (d) or pursuant to subsection (e), and no
provision of this title or of any other provision of Federal or State
law may be construed to the contrary.
``(g) The trustee shall provide for the reasonable fees and costs
incurred by a labor organization under this section, upon request and
after notice and a hearing.
``(h) A collective bargaining agreement that is assumed shall be
assumed in accordance with section 365.''.
SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED EMPLOYEES.
Section 1114 of title 11, United States Code, is amended--
(1) in subsection (a), by inserting ``, whether or not the
debtor asserts a right to unilaterally modify such payments
under such plan, fund, or program'' before the period at the
end;
(2) in subsection (b)(2), by inserting after ``section''
the following: ``, and a labor organization serving as the
authorized representative under subsection (c)(1),'';
(3) in subsection (f), by striking ``(f)'' and all that
follows through paragraph (2) and inserting the following:
``(f)(1) If a trustee seeks modification of retiree benefits, then
the trustee shall provide a notice to the authorized representative
that modifications are being proposed pursuant to this section, and
shall promptly provide an initial proposal. Thereafter, the trustee
shall confer in good faith with the authorized representative at
reasonable times and for a reasonable period in light of the complexity
of the case in attempting to reach mutually satisfactory modifications.
``(2) The initial proposal and subsequent proposals by the trustee
shall be based upon a business plan for the reorganization of the
debtor and shall reflect the most complete and reliable information
available. The trustee shall provide to the authorized representative
all information that is relevant for the negotiations. The court may
enter a protective order to prevent the disclosure of information if
disclosure could compromise the debtor's position with respect to its
competitors in the industry, subject to the needs of the authorized
representative to evaluate the trustee's proposals and an application
pursuant to subsection (g) or (h).
``(3) Modifications proposed by the trustee--
``(A) shall be proposed only as part of a program of
workforce and nonworkforce cost savings devised for the
reorganization of the debtor, including savings in management
personnel costs;
``(B) shall be limited to modifications that are designed
to achieve a specified aggregate financial contribution for the
retiree group represented by the authorized representative
(taking into consideration any cost savings implemented within
the 12-month period before the date of filing of the petition
with respect to the retiree group), and shall be no more than
the minimum savings essential to permit the debtor to exit
bankruptcy, such that confirmation of a plan of reorganization
is not likely to be followed by the liquidation, or the need
for further financial reorganization, of the debtor (or any
successor to the debtor) in the short term; and
``(C) shall not be disproportionate or overly burden the
retiree group, either in the amount of the cost savings sought
from such group or the nature of the modifications.'';
(4) in subsection (g)--
(A) by striking ``(g)'' and all that follows
through the semicolon at the end of paragraph (3) and
inserting the following:
``(g)(1) If, after a period of negotiations, the trustee and the
authorized representative have not reached agreement over mutually
satisfactory modifications and further negotiations are not likely to
produce mutually satisfactory modifications, then the trustee may file
a motion seeking modifications in the payment of retiree benefits after
notice and a hearing. Absent agreement of the parties, no such hearing
shall be held before the expiration of the 21-day period beginning on
the date on which notice of the hearing is provided to the authorized
representative. Only the debtor and the authorized representative may
appear and be heard at such hearing.
``(2) The court may grant a motion to modify the payment of retiree
benefits only if, based on clear and convincing evidence--
``(A) the court finds that the trustee has complied with
the requirements of subsection (f);
``(B) the court has considered alternative proposals by the
authorized representative and has determined that such
proposals do not meet the requirements of subsection (f)(3)(B);
``(C) the court finds that further negotiations regarding
the trustee's proposal or an alternative proposal by the
authorized representative are not likely to produce a mutually
satisfactory agreement;
``(D) the court finds that implementation of the proposal
shall not cause irreparable harm to the affected retirees; and
``(E) the court concludes that an order granting the motion
and immediate implementation of the trustee's proposal is
essential to permit the debtor to exit bankruptcy, such that
confirmation of a plan of reorganization is not likely to be
followed by liquidation, or the need for further financial
reorganization, of the debtor (or a successor to the debtor) in
the short term.
``(3) If a trustee has implemented a program of incentive pay,
bonuses, or other financial returns for insiders, senior executive
officers, or the 20 next most highly compensated employees or
consultants providing services to the debtor during the bankruptcy, or
such a program was implemented within 180 days before the date of the
filing of the petition, the court shall presume that the trustee has
failed to satisfy the requirements of subparagraph (f)(3)(C).''; and
(B) by striking ``except that in no case'' and
inserting the following:
``(4) In no case''; and
(5) by striking subsection (k) and redesignating
subsections (l) and (m) as subsections (k) and (l),
respectively.
SEC. 203. PROTECTION OF EMPLOYEE BENEFITS IN A SALE OF ASSETS.
Section 363(b) of title 11, United States Code, is amended by
adding at the end the following:
``(3) In approving a sale under this subsection, the court shall
consider the extent to which a bidder has offered to maintain existing
jobs, preserve terms and conditions of employment, and assume or match
pension and retiree health benefit obligations in determining whether
an offer constitutes the highest or best offer for such property.''.
SEC. 204. CLAIM FOR PENSION LOSSES.
Section 502 of title 11, United States Code, is amended by adding
at the end the following:
``(l) The court shall allow a claim asserted by an active or
retired participant, or by a labor organization representing such
participants, in a defined benefit plan terminated under section 4041
or 4042 of the Employee Retirement Income Security Act of 1974, for any
shortfall in pension benefits accrued as of the effective date of the
termination of such pension plan as a result of the termination of the
plan and limitations upon the payment of benefits imposed pursuant to
section 4022 of such Act, notwithstanding any claim asserted and
collected by the Pension Benefit Guaranty Corporation with respect to
such termination.
``(m) The court shall allow a claim of a kind described in section
101(5)(C) by an active or retired participant in a defined contribution
plan (within the meaning of section 3(34) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(34))), or by a labor
organization representing such participants. The amount of such claim
shall be measured by the market value of the stock at the time of
contribution to, or purchase by, the plan and the value as of the
commencement of the case.''.
SEC. 205. PAYMENTS BY SECURED LENDER.
Section 506(c) of title 11, United States Code, is amended by
adding at the end the following: ``If employees have not received
wages, accrued vacation, severance, or other benefits owed under the
policies and practices of the debtor, or pursuant to the terms of a
collective bargaining agreement, for services rendered on and after the
date of the commencement of the case, then such unpaid obligations
shall be deemed necessary costs and expenses of preserving, or
disposing of, property securing an allowed secured claim and shall be
recovered even if the trustee has otherwise waived the provisions of
this subsection under an agreement with the holder of the allowed
secured claim or a successor or predecessor in interest.''.
SEC. 206. PRESERVATION OF JOBS AND BENEFITS.
Title 11, United States Code, is amended--
(1) by inserting before section 1101 the following:
``SEC. 1100. STATEMENT OF PURPOSE.
``A debtor commencing a case under this chapter shall have as its
principal purpose the reorganization of its business to preserve going
concern value to the maximum extent possible through the productive use
of its assets and the preservation of jobs that will sustain productive
economic activity.'';
(2) in section 1129(a), as amended by section 104, by
adding at the end the following:
``(18) The debtor has demonstrated that the reorganization
preserves going concern value to the maximum extent possible
through the productive use of the debtor's assets and preserves
jobs that sustain productive economic activity.'';
(3) in section 1129(c), by striking the last sentence and
inserting the following: ``If the requirements of subsections
(a) and (b) are met with respect to more than 1 plan, the court
shall, in determining which plan to confirm--
``(1) consider the extent to which each plan would preserve
going concern value through the productive use of the debtor's
assets and the preservation of jobs that sustain productive
economic activity; and
``(2) confirm the plan that better serves such interests.
A plan that incorporates the terms of a settlement with a labor
organization representing employees of the debtor shall presumptively
constitute the plan that satisfies this subsection.''; and
(4) in the table of sections for chapter 11, by inserting
the following before the item relating to section 1101:
``1100. Statement of purpose.''.
SEC. 207. TERMINATION OF EXCLUSIVITY.
Section 1121(d) of title 11, United States Code, is amended by
adding at the end the following:
``(3) For purposes of this subsection, cause for reducing the 120-
day period or the 180-day period includes the following:
``(A) The filing of a motion pursuant to section 1113
seeking rejection of a collective bargaining agreement if a
plan based upon an alternative proposal by the labor
organization is reasonably likely to be confirmed within a
reasonable time.
``(B) The proposed filing of a plan by a proponent other
than the debtor, which incorporates the terms of a settlement
with a labor organization if such plan is reasonably likely to
be confirmed within a reasonable time.''.
TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS
SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM BANKRUPTCY.
Section 1129(a) of title 11, United States Code, is amended--
(1) in paragraph (4), by adding at the end the following:
``Except for compensation subject to review under paragraph
(5), payments or other distributions under the plan to or for
the benefit of insiders, senior executive officers, and any of
the 20 next most highly compensated employees or consultants
providing services to the debtor, shall not be approved except
as part of a program of payments or distributions generally
applicable to employees of the debtor, and only to the extent
that the court determines that such payments are not excessive
or disproportionate compared to distributions to the debtor's
nonmanagement workforce.''; and
(2) in paragraph (5)--
(A) in subparagraph (A)(ii), by striking ``and'' at
the end; and
(B) in subparagraph (B), by striking the period at
the end and inserting the following: ``; and
``(C) the compensation disclosed pursuant to
subparagraph (B) has been approved by, or is subject to
the approval of, the court as reasonable when compared
to individuals holding comparable positions at
comparable companies in the same industry and not
disproportionate in light of economic concessions by
the debtor's nonmanagement workforce during the
case.''.
SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.
Section 503(c) of title 11, United States Code, is amended--
(1) in paragraph (1)--
(A) by inserting ``, a senior executive officer, or
any of the 20 next most highly compensated employees or
consultants'' after ``an insider'';
(B) by inserting ``or for the payment of
performance or incentive compensation, or a bonus of
any kind, or other financial returns designed to
replace or enhance incentive, stock, or other
compensation in effect before the date of the
commencement of the case,'' after ``remain with the
debtor's business,''; and
(C) by inserting ``clear and convincing'' before
``evidence in the record''; and
(2) by amending paragraph (3) to read as follows:
``(3) other transfers or obligations, to or for the benefit
of insiders, senior executive officers, managers, or
consultants providing services to the debtor, in the absence of
a finding by the court, based upon clear and convincing
evidence, and without deference to the debtor's request for
such payments, that such transfers or obligations are essential
to the survival of the debtor's business or (in the case of a
liquidation of some or all of the debtor's assets) essential to
the orderly liquidation and maximization of value of the assets
of the debtor, in either case, because of the essential nature
of the services provided, and then only to the extent that the
court finds such transfers or obligations are reasonable
compared to individuals holding comparable positions at
comparable companies in the same industry and not
disproportionate in light of economic concessions by the
debtor's nonmanagement workforce during the case.''.
SEC. 303. ASSUMPTION OF EXECUTIVE BENEFIT PLANS.
Section 365 of title 11, United States Code, is amended--
(1) in subsection (a), by striking ``and (d)'' and
inserting ``(d), (q), and (r)''; and
(2) by adding at the end the following:
``(q) No deferred compensation arrangement for the benefit of
insiders, senior executive officers, or any of the 20 next most highly
compensated employees of the debtor shall be assumed if a defined
benefit plan for employees of the debtor has been terminated pursuant
to section 4041 or 4042 of the Employee Retirement Income Security Act
of 1974, on or after the date of the commencement of the case or within
180 days before the date of the commencement of the case.
``(r) No plan, fund, program, or contract to provide retiree
benefits for insiders, senior executive officers, or any of the 20 next
most highly compensated employees of the debtor shall be assumed if the
debtor has obtained relief under subsection (g) or (h) of section 1114
to impose reductions in retiree benefits or under subsection (d) or (e)
of section 1113 to impose reductions in the health benefits of active
employees of the debtor, or reduced or eliminated health benefits for
active or retired employees within 180 days before the date of the
commencement of the case.''.
SEC. 304. RECOVERY OF EXECUTIVE COMPENSATION.
Title 11, United States Code, is amended by inserting after section
562 the following:
``SEC. 563. RECOVERY OF EXECUTIVE COMPENSATION.
``(a) If a debtor has obtained relief under subsection (d) of
section 1113, or subsection (g) of section 1114, by which the debtor
reduces the cost of its obligations under a collective bargaining
agreement or a plan, fund, or program for retiree benefits as defined
in section 1114(a), the court, in granting relief, shall determine the
percentage diminution in the value of the obligations when compared to
the debtor's obligations under the collective bargaining agreement, or
with respect to retiree benefits, as of the date of the commencement of
the case under this title before granting such relief. In making its
determination, the court shall include reductions in benefits, if any,
as a result of the termination pursuant to section 4041 or 4042 of the
Employee Retirement Income Security Act of 1974, of a defined benefit
plan administered by the debtor, or for which the debtor is a
contributing employer, effective at any time on or after 180 days
before the date of the commencement of a case under this title. The
court shall not take into account pension benefits paid or payable
under such Act as a result of any such termination.
``(b) If a defined benefit pension plan administered by the debtor,
or for which the debtor is a contributing employer, has been terminated
pursuant to section 4041 or 4042 of the Employee Retirement Income
Security Act of 1974, effective at any time on or after 180 days before
the date of the commencement of a case under this title, but a debtor
has not obtained relief under subsection (d) of section 1113, or
subsection (g) of section 1114, then the court, upon motion of a party
in interest, shall determine the percentage diminution in the value of
benefit obligations when compared to the total benefit liabilities
before such termination. The court shall not take into account pension
benefits paid or payable under title IV of the Employee Retirement
Income Security Act of 1974 as a result of any such termination.
``(c) Upon the determination of the percentage diminution in value
under subsection (a) or (b), the estate shall have a claim for the
return of the same percentage of the compensation paid, directly or
indirectly (including any transfer to a self-settled trust or similar
device, or to a nonqualified deferred compensation plan under section
409A(d)(1) of the Internal Revenue Code of 1986) to any officer of the
debtor serving as member of the board of directors of the debtor within
the year before the date of the commencement of the case, and any
individual serving as chairman or lead director of the board of
directors at the time of the granting of relief under section 1113 or
1114 or, if no such relief has been granted, the termination of the
defined benefit plan.
``(d) The trustee or a committee appointed pursuant to section 1102
may commence an action to recover such claims, except that if neither
the trustee nor such committee commences an action to recover such
claim by the first date set for the hearing on the confirmation of plan
under section 1129, any party in interest may apply to the court for
authority to recover such claim for the benefit of the estate. The
costs of recovery shall be borne by the estate.
``(e) The court shall not award postpetition compensation under
section 503(c) or otherwise to any person subject to subsection (c) if
there is a reasonable likelihood that such compensation is intended to
reimburse or replace compensation recovered by the estate under this
section.''.
SEC. 305. PREFERENTIAL COMPENSATION TRANSFER.
Section 547 of title 11, United States Code, is amended by adding
at the end the following:
``(j) The trustee may avoid a transfer to or for the benefit of an
insider (including an obligation incurred for the benefit of an insider
under an employment contract) made in anticipation of bankruptcy, or a
transfer made in anticipation of bankruptcy to a consultant who is
formerly an insider and who is retained to provide services to an
entity that becomes a debtor (including an obligation under a contract
to provide services to such entity or to a debtor) made or incurred on
or within 1 year before the filing of the petition. No provision of
subsection (c) shall constitute a defense against the recovery of such
transfer. The trustee or a committee appointed pursuant to section 1102
may commence an action to recover such transfer, except that, if
neither the trustee nor such committee commences an action to recover
such transfer by the time of the commencement of a hearing on the
confirmation of a plan under section 1129, any party in interest may
apply to the court for authority to recover the claims for the benefit
of the estate. The costs of recovery shall be borne by the estate.''.
TITLE IV--OTHER PROVISIONS
SEC. 401. UNION PROOF OF CLAIM.
Section 501(a) of title 11, United States Code, is amended by
inserting ``, including a labor organization,'' after ``A creditor''.
SEC. 402. EXCEPTION FROM AUTOMATIC STAY.
Section 362(b) of title 11, United States Code, is amended--
(1) in paragraph (27), by striking ``and'' at the end;
(2) in paragraph (28), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following:
``(29) of the commencement or continuation of a grievance,
arbitration, or similar dispute resolution proceeding
established by a collective bargaining agreement that was or
could have been commenced against the debtor before the filing
of a case under this title, or the payment or enforcement of an
award or settlement under such proceeding.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on the Judiciary.
Referred to the Subcommittee on Courts, Commercial and Administrative Law.
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