[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2092 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2092

   To amend title 11, United States Code, to improve protections for 
            employees and retirees in business bankruptcies.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 25, 2007

  Mr. Durbin (for himself, Mr. Kennedy, Mr. Feingold, and Mr. Obama) 
introduced the following bill; which was read twice and referred to the 
                       Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
   To amend title 11, United States Code, to improve 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.

    This Act may be cited as the ``Protecting Employees and Retirees in 
Business Bankruptcies Act of 2007''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Recent corporate restructurings have exacted a 
        devastating toll on workers through deep cuts in wages and 
        benefits, termination of defined benefit pension plans, and the 
        transfer of productive assets to lower wage economies outside 
        the United States. Retirees have suffered deep cutbacks in 
        benefits when companies in bankruptcy renege on their retiree 
        health obligations and terminate pension plans.
            (2) Congress enacted chapter 11 of title 11, United States 
        Code, to protect jobs and enhance enterprise value for all 
        stakeholders and not to be used as a strategic weapon to 
        eliminate good paying jobs, strip employees and their families 
        of a lifetime's worth of earned benefits and hinder their 
        ability to participate in a prosperous and sustainable economy. 
        Specific laws designed to treat workers and retirees fairly and 
        keep companies operating are instead causing the burdens of 
        bankruptcy to fall disproportionately and overwhelmingly on 
        employees and retirees, those least able to absorb the losses.
            (3) At the same time that working families and retirees are 
        forced to make substantial economic sacrifices, executive pay 
        enhancements continue to flourish in business bankruptcies, 
        despite recent congressional enactments designed to curb lavish 
        pay packages for those in charge of failing enterprises. 
        Bankruptcy should not be a haven for the excesses of executive 
        pay.
            (4) Employees and retirees, unlike other creditors, have no 
        way to diversify the risk of their employer's bankruptcy.
            (5) Comprehensive reform is essential in order to remedy 
        these fundamental inequities in the bankruptcy process and to 
        recognize the unique firm-specific investment by employees and 
        retirees in their employers' business through their labor.

SEC. 3. 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. 4. PRIORITY FOR STOCK VALUE LOSSES IN DEFINED CONTRIBUTION PLANS.

    (a) 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 or 1 of 
                the 10 most highly compensated employees of the debtor 
                (if 1 or more are not insiders), if such securities 
                were attributable to--
                            ``(i) employer contributions by the debtor 
                        or an affiliate of the debtor, other than 
                        elective deferrals (within the meaning of 
                        section 402(g) of the Internal Revenue Code of 
                        1986), and any earnings thereon; or
                            ``(ii) elective deferrals and any earnings 
                        thereon.''.
    (b) Section 507(a) of title 11, United States Code, is amended--
            (1) by redesignating paragraphs (6) through (10) as 
        paragraphs (7) through (11), respectively;
            (2) by inserting after paragraph (5) the following:
            ``(6) Sixth, loss of the value of equity securities of the 
        debtor or affiliate of the debtor that are 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)), without regard to when services resulting in the 
        contribution of stock to the plan were rendered, 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 where an employer or plan sponsor that 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.'';
            (3) in paragraph (7), as redesignated, by striking 
        ``Sixth'' and inserting ``Seventh'';
            (4) in paragraph (8), as redesignated, by striking 
        ``Seventh'' and inserting ``Eighth'';
            (5) in paragraph (9), as redesignated, by striking 
        ``Eighth'' and inserting ``Ninth'';
            (6) in paragraph (10), as redesignated, by striking 
        ``Ninth'' and inserting ``Tenth''; and
            (7) in paragraph (11), as redesignated, by striking 
        ``Tenth'' and inserting ``Eleventh''.

SEC. 5. 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, or owed pursuant to a collective bargaining agreement, 
        but not under an individual contract of employment, for 
        termination or layoff 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. 6. EXECUTIVE COMPENSATION UPON EXIT FROM BANKRUPTCY.

    Section 1129(a)(5) of title 11, United States Code, is amended--
            (1) in subparagraph (A)(ii), by striking ``and'' at the 
        end; and
            (2) 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 persons 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. 7. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.

    Section 503(c) of title 11, United States Code, is amended--
            (1) in paragraph (1), 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 prior to the 
        date of the commencement of the case,'' after ``remain with the 
        debtor's business,''; and
            (2) by amending paragraph (3) to read as follows:
            ``(3) other transfers or obligations, to or for the benefit 
        of officers, of managers, or of consultants retained to provide 
        services to the debtor, before or after the date of filing of 
        the petition, in the absence of a finding by the court based 
        upon evidence in the record, 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. 8. REJECTION OF COLLECTIVE BARGAINING AGREEMENTS.

    Section 1113 of title 11, United States Code, is amended--
            (1) by striking subsections (a) through (c) 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 
the provisions of this section.
    ``(b)(1) Where a debtor in possession or trustee (hereinafter in 
this section referred to collectively as a `trustee') seeks rejection 
of a collective bargaining agreement, a motion seeking rejection shall 
not be filed unless the trustee has first met with the authorized 
representative (at reasonable times and for a reasonable period in 
light of the complexity of the case) to confer in good faith in 
attempting to reach mutually acceptable modifications of such 
agreement. Proposals by the trustee to modify the agreement shall be 
limited to modifications to the agreement that--
            ``(A) are designed to achieve a total aggregate financial 
        contribution for the affected labor group for a period not to 
        exceed 2 years after the effective date of the plan;
            ``(B) shall be no more than the minimal savings necessary 
        to permit the debtor to exit bankruptcy, such that confirmation 
        of such plan is not likely to be followed by the liquidation of 
        the debtor or any successor to the debtor; and
            ``(C) shall not overly burden the affected labor group, 
        either in the amount of the savings sought from such group or 
        the nature of the modifications, when compared to other 
        constituent groups expected to maintain ongoing relationships 
        with the debtor, including management personnel.
    ``(2) Proposals by the trustee under paragraph (1) shall be based 
upon the most complete and reliable information available. Information 
that is relevant for the negotiations shall be provided to the 
authorized representative.
    ``(c)(1) If, after a period of negotiations, the debtor and the 
authorized representative have not reached agreement over mutually 
satisfactory modifications and the parties are at an impasse, the 
debtor may file a motion seeking rejection of the collective bargaining 
agreement after notice and a hearing held pursuant to subsection (d). 
The court may grant a motion to reject a collective bargaining 
agreement only if the court finds that--
            ``(A) the debtor has, prior to such hearing, complied with 
        the requirements of subsection (b) and has conferred in good 
        faith with the authorized representative regarding such 
        proposed modifications, and the parties were at an impasse;
            ``(B) the court has considered alternative proposals by the 
        authorized representative and has determined that such 
        proposals do not meet the requirements of subparagraphs (A) and 
        (B) of subsection (b)(1);
            ``(C) further negotiations are not likely to produce a 
        mutually satisfactory agreement; and
            ``(D) the court has considered--
                    ``(i) the effect of the proposed financial relief 
                on the affected labor group;
                    ``(ii) the ability of the debtor to retain an 
                experienced and qualified workforce; and
                    ``(iii) the effect of a strike in the event of 
                rejection of the collective bargaining agreement.
    ``(2) In reaching a decision under this subsection regarding 
whether modifications proposed by the debtor and the total aggregate 
savings meet the requirements of subsection (b), the court shall take 
into account--
            ``(A) the ongoing impact on the debtor of the debtor's 
        relationship with all subsidiaries and affiliates, regardless 
        of whether any such subsidiary or affiliate is domestic or 
        nondomestic, or whether any such subsidiary or affiliate is a 
        debtor entity; and
            ``(B) whether the authorized representative agreed to 
        provide financial relief to the debtor within the 24-month 
        period prior to the date of the commencement of the case, and 
        if so, shall consider the total value of such relief in 
        evaluating the debtor's proposed modifications.
    ``(3) In reaching a decision under this subsection, where a debtor 
has implemented a program of incentive pay, bonuses, or other financial 
returns for insiders or senior management personnel during the 
bankruptcy, or has implemented such a program within 180 days before 
the date of the commencement of the case, the court shall presume that 
the debtor has failed to satisfy the requirements of subsection 
(b)(1)(C).'';
            (2) in subsection (d)--
                    (A) by striking ``(d)'' and all that follows 
                through paragraph (2) and inserting the following:
    ``(d)(1) Upon the filing of a motion for rejection of a collective 
bargaining agreement, the court shall schedule a hearing to be held on 
not less than 21 days notice (unless the debtor and the authorized 
representative agree to a shorter time). Only the debtor and the 
authorized representative may appear and be heard at such hearing.''; 
and
                    (B) by redesignating paragraph (3) as paragraph 
                (2);
            (3) in subsection (f), by adding at the end the following: 
        ``Any payment required to be made under this section before the 
        date on which a plan confirmed under section 1129 is effective 
        has the status of an allowed administrative expense, as 
        provided in section 503.''; and
            (4) by adding at the end the following:
    ``(g) The rejection of a collective bargaining agreement 
constitutes a breach of such contract with the same effect as rejection 
of an executory contract pursuant to section 365(g). No claim for 
rejection damages shall be limited by section 502(b)(7). Economic self-
help by an authorized representative shall be permitted upon a court 
order granting a motion to reject a collective bargaining agreement 
under subsection (c) or court-authorized interim changes under 
subsection (e), and no provision of this title or of any other Federal 
or State law shall be construed to the contrary.
    ``(h) At any time after the date on which an order is entered 
authorizing rejection, or where an agreement providing mutually 
satisfactory modifications has been entered into between the debtor and 
the authorized representative, at any time after such agreement has 
been entered into, the authorized representative 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 so long as the increase or other relief 
is consistent with the standard set forth in subsection (b)(1)(B).
    ``(i) Upon request by the authorized representative, and where the 
court finds that the prospects for reaching a mutually satisfactory 
agreement would be aided by granting the request, the court may direct 
that a dispute under subsection (c) be heard and determined by a 
neutral panel of experienced labor arbitrators in lieu of a court 
proceeding under subsection (d). The decision of such panel shall have 
the same effect as a decision by the court. The court's decision 
directing the appointment of a neutral panel is not subject to appeal.
    ``(j) Upon request by the authorized representative, the debtor 
shall provide for the reasonable fees and costs incurred by the 
authorized representative under this section, after notice and a 
hearing.
    ``(k) If a plan to be confirmed under section 1129 provides for the 
liquidation of the debtor, whether by sale or cessation of all or part 
of the business, the trustee and the authorized representative shall 
confer regarding the effects of such liquidation on the affected labor 
group, in accordance with applicable nonbankruptcy law, and shall 
provide for the payment of all accrued obligations not assumed as part 
of a sale transaction, and for such other terms as may be agreed upon, 
in order to ensure an orderly transfer of assets or cessation of the 
business. Any such payments shall have the status of allowed 
administrative expenses under section 503.
    ``(l) A collective bargaining agreement that is assumed shall be 
assumed in accordance with section 365.''.

SEC. 9. 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 (c)(1), by adding at the end the 
        following: ``Where a labor organization elects to serve as the 
        authorized representative, the debtor shall provide for the 
        reasonable fees and costs incurred by the authorized 
        representative under this section after notice and a 
        hearing.'';
            (3) in subsection (f), by striking ``(f)'' and all that 
        follows through paragraph (2) and inserting the following:
    ``(f)(1) Where a trustee seeks modification of retiree benefits, a 
motion seeking modification of such benefits shall not be filed, unless 
the trustee has first met with the authorized representative (at 
reasonable times and for a reasonable period in light of the complexity 
of the case) to confer in good faith in attempting to reach mutually 
satisfactory modifications. Proposals by the trustee to modify retiree 
benefits shall be limited to modifications in retiree benefits that--
            ``(A) are designed to achieve a total aggregate financial 
        contribution for the affected retiree group for a period not to 
        exceed 2 years after the effective date of the plan;
            ``(B) shall be no more than the minimal savings necessary 
        to permit the debtor to exit bankruptcy, such that confirmation 
        of such plan is not likely to be followed by the liquidation of 
        the debtor or any successor to the debtor; and
            ``(C) shall not overly burden the affected retirees, either 
        in the amount of the savings sought or the nature of the 
        modifications, when compared to other constituent groups 
        expected to maintain ongoing relationships with the debtor, 
        including management personnel.
    ``(2) Proposals by the trustee under paragraph (1) shall be based 
upon the most complete and reliable information available. Information 
that is relevant for the negotiations shall be provided to the 
authorized representative.'';
            (4) in subsection (g), by striking ``(g)'' and all that 
        follows through the semicolon at the end of paragraph (3) and 
        inserting the following:
    ``(g) If, after a period of negotiations, the debtor and the 
authorized representative have not reached agreement over mutually 
satisfactory modifications and the parties are at an impasse, the 
debtor may apply to the court for modifications in the payment of 
retiree benefits after notice and a hearing held pursuant to subsection 
(k). The court may grant a motion to modify the payment of retiree 
benefits only if the court finds that--
            ``(1) the debtor has, prior to the hearing, complied with 
        the requirements of subsection (f) and has conferred in good 
        faith with the authorized representative regarding such 
        proposed modifications and the parties were at an impasse;
            ``(2) the court has considered alternative proposals by the 
        authorized representative and has determined that such 
        proposals do not meet the requirements of subparagraphs (A) and 
        (B) of subsection (f)(1);
            ``(3) further negotiations are not likely to produce a 
        mutually satisfactory agreement; and
            ``(4) the court has considered--
                    ``(A) the effect of the proposed modifications on 
                the affected retirees; and
                    ``(B) where the authorized representative is a 
                labor organization, the effect of a strike in the event 
                of modification of retiree health benefits;'';
            (5) in subsection (k)--
                    (A) in paragraph (1)--
                            (i) in the first sentence, by striking 
                        ``fourteen'' and inserting ``21''; and
                            (ii) by striking the second and third 
                        sentences, and inserting the following: ``Only 
                        the debtor and the authorized representative 
                        may appear and be heard at such hearing.'';
                    (B) by striking paragraph (2); and
                    (C) by redesignating paragraph (3) as paragraph 
                (2); and
            (6) by redesignating subsections (l) and (m) as subsections 
        (n) and (o), respectively, and inserting the following:
    ``(l) In determining whether the proposed modifications comply with 
subsection (f)(1)(A), the court shall take into account the ongoing 
impact on the debtor of the debtor's relationship with all subsidiaries 
and affiliates, regardless of whether any such subsidiary or affiliate 
is domestic or nondomestic, or whether any such subsidiary or affiliate 
is a debtor entity.
    ``(m) No plan, fund, program, or contract to provide retiree 
benefits for insiders or senior management shall be assumed by the 
debtor if the debtor has obtained relief under subsection (g) or (h) 
for reductions in retiree benefits or under subsection (c) or (e) of 
section 1113 for reductions in the health benefits of active employees 
of the debtor on or after the commencement of the case or reduced or 
eliminated active or retiree benefits within 180 days prior to the date 
of the commencement of the case.''.

SEC. 10. PROTECTION OF EMPLOYEE BENEFITS IN A SALE OF ASSETS.

    Section 363 of title 11, United States Code, is amended--
            (1) in subsection (b), 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, has preserved retiree health benefits, and has assumed the 
obligations of any defined benefit plan, in determining whether an 
offer constitutes the highest or best offer for such property.''; and
            (2) by adding at the end the following:
    ``(q) If, as a result of a sale approved under this section, 
retiree benefits, as defined under section 1114(a), are modified or 
eliminated pursuant to the provisions of subsection (e)(1) or (h) of 
section 1114 or otherwise, then, except as otherwise provided in an 
agreement with the authorized representative of such retirees, a charge 
of $20,000 per retiree shall be made against the proceeds of such sale 
(or paid by the buyer as part of the sale) for the purpose of--
            ``(1) funding 12 months of health coverage following the 
        termination or modification of such coverage through a plan, 
        fund, or program made available by the buyer, by the debtor, or 
        by a third party; or
            ``(2) providing the means by which affected retirees may 
        obtain replacement coverage on their own,
except that the selection of either paragraph (1) or (2) shall be upon 
the consent of the authorized representative, within the meaning of 
section 1114(b), if any. Any claim for modification or elimination of 
retiree benefits pursuant to section 1114(i) shall be offset by the 
amounts paid under this subsection.''.

SEC. 11. 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. 12. CLAIM FOR LOSS OF PENSION BENEFITS.

    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 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.''.

SEC. 13. PAYMENTS BY SECURED LENDER.

    Section 506(c) of title 11, United States Code, is amended by 
adding at the end the following: ``Where employees have not received 
wages, accrued vacation, severance, or other benefits owed pursuant to 
the terms of a collective bargaining agreement for services rendered on 
and after the date of the commencement of the case, 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 successor or predecessor in interest.''.

SEC. 14. 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 
purpose the reorganization of its business and, to the greatest extent 
possible, maintaining or enhancing the productive use of its assets, so 
as to preserve jobs.'';
            (2) in section 1129(a), by adding at the end the following:
            ``(17) The debtor has demonstrated that every reasonable 
        effort has been made to maintain existing jobs and mitigate 
        losses to employees and retirees.'';
            (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, consider--
            ``(1) the extent to which each plan would maintain existing 
        jobs, has preserved retiree health benefits, and has maintained 
        any existing defined benefit plans; and
            ``(2) the preferences of creditors and equity security 
        holders, and shall confirm the plan that better serves the 
        interests of employees and retirees.''; and
            (4) in the table of sections in chapter 11, by inserting 
        the following before the item relating to section 1101:

``1100. Statement of purpose.''.

SEC. 15. ASSUMPTION OF EXECUTIVE RETIREMENT PLANS.

    Section 365 of title 11, United States Code, is amended--
            (1) in subsection (a), by striking ``and (d)'' and 
        inserting ``(d), and (q)''; and
            (2) by adding at the end the following:
    ``(q) No deferred compensation arrangement for the benefit of 
insiders or senior management 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 prior to the date of the commencement of the 
case.''.

SEC. 16. 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 (c) or (e) 
of section 1113, or subsection (g) or (h) of section 1114, by which the 
debtor reduces its contractual obligations under a collective 
bargaining agreement or retiree benefits plan, the court, as part of 
the entry of such order granting relief, shall determine the percentage 
diminution, as a result of the relief granted under section 1113 or 
1114, 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. 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 the provisions of title IV of such Act as a result of 
any such termination.
    ``(b) Where a defined benefit 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 (c) or (e) of section 1113, or 
subsection (g) or (h) of section 1114 of this title, 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 prior to such termination. The court shall 
not take into account pension benefits paid or payable under the 
provisions of 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 and any individual serving as lead 
director of the board of directors at the time of the granting of 
relief under section 1113 or 1114 of this title 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 the provisions of 
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. 17. 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.''.

SEC. 18. 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.''.

SEC. 19. 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:
            ``(18) In a case in which the debtor initiated proceedings 
        under section 1113, the plan provides for recovery of rejection 
        damages (where the debtor obtained relief under subsection (c) 
        or (e) of section 1113 prior to confirmation of the plan) 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).''; and
            (2) by striking paragraph (13) and inserting the following:
            ``(13) With respect to retiree benefits, as that term is 
        defined in section 1114, 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 prior to 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 
                prior to confirmation of the plan, the continuation of 
                all such retiree benefits maintained or established in 
                whole or in part by the debtor prior to the date of the 
                filing of the petition; and
                    ``(B) provides for allowed claims for 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).''.
                                 <all>