[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 97 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                 H. R. 97

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 6, 2015

 Mr. Conyers (for himself, Mr. Cohen, Mr. Deutch, Ms. Jackson Lee, Mr. 
Johnson of Georgia, Ms. Lofgren, and Ms. Lee) 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 2015''.
    (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 one 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>