[Congressional Record Volume 153, Number 143 (Tuesday, September 25, 2007)]
[Extensions of Remarks]
[Page E1976]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 PROTECTING EMPLOYEES AND RETIREES IN BUSINESS BANKRUPTCIES ACT OF 2007

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                      Tuesday, September 25, 2007

  Mr. CONYERS. Madam Speaker, the ``Protecting Employees and Retirees 
in Business Bankruptcies Act of 2007,'' addresses the vast inequities 
in current bankruptcy law with respect to how American workers and 
retirees are treated, an area long-neglected by Congress.
  The rights of workers and retirees have greatly eroded over the past 
two decades, particularly in the context of Chapter 11. Let me just 
cite three reasons.
  First, it is no secret that certain districts in our Nation interpret 
the law to favor the reorganization of a business over all other 
priorities, including job preservation, salary protections, and other 
benefits. Part of the problem is that the law is simply not clear, 
leading to a split of authority among the circuits.
  This is particularly true with respect to the standards by which 
collective bargaining agreements can be rejected and retiree benefits 
can be modified in Chapter 11. Businesses, as a result, take advantage 
of these venue options and file their Chapter 11 cases in employer-
friendly districts. This was one of the main reasons that Delphi, a 
Michigan-headquartered company, filed for bankruptcy in New York.
  Second, it is clear that at least some businesses use Chapter 11 to 
bust unions or to at least give themselves unfair leverage in its 
negotiations with unions. According to a recently released GAO analysis 
that I requested nearly 2 years ago, 30 percent of companies in the 
study sought to reject their collective bargaining agreements in 
bankruptcy. Nearly as many companies took advantage of special 
provisions in the Bankruptcy Code by employers that can modify retiree 
benefits.
  Let me be specific here. What we are talking about is terminating 
retiree health care benefits, medical benefits, prescription drug 
benefits, disability benefits, and death benefits, among other 
protections.
  And, remember that these benefits were bargained for in good faith by 
hardworking Americans who gave their all to their employers and now are 
in retirement. This is a travesty.
  Third, as a result of Chapter 11's inequitable playing field, 
employers are able to extract major concessions from workers and 
retirees, while lining their own pockets. As we learned at a hearing 
held earlier this year by the Subcommittee on Commercial and 
Administrative Law, executives of Chapter 11 debtors often receive 
extravagant multi-million dollar bonuses and stock options, while 
regular workers are forced to accept drastic pay cuts or even job 
losses and while retirees lose hard-won pensions and health benefits.
  As many of you know, the Ford Motor Company reported a record $12.7 
billion loss for last year. But what many of you may not know is that 
Ford paid $28 million to its new CEO, Alan Mulally, in his first 4 
months on the job. This disclosure comes as companies like Ford, 
General Motors, and DaimlerChrysler are in the midst of negotiations 
with unions to obtain concessions and labor cost savings when their 
current contracts end in this month.
  A factor that will likely be present at the bargaining table is the 
threat of a potential Chapter 11 filing. As many of you know, the 
United Auto Workers yesterday announced a strike at General Motors 
principally because GM wants to shed more than $50 billion in future 
health care benefits for retirees.
  We need to restore the level playing field that the drafters of 
Chapter 11 originally envisioned and to ensure that workers and 
retirees receive fair treatment when their company is in bankruptcy. It 
is time that we include the interests of working families in the 
bankruptcy law and consider how we can add a measure of fairness to a 
playing field that is overwhelmingly tilted against workers.
  My bill addresses these problems by:
  Increasing the amount by which unpaid wage and employee benefit 
claims would be entitled to payment priority;
  Creating a more level playing field for employees in Chapter 11 cases 
where employers want to terminate jobs, reduce wages, reject collective 
bargaining agreements, and terminate medical benefits for retirees;
  Prohibiting companies in bankruptcy from paying lavish performance 
bonuses and incentive compensation to key management; and
  Ensuring that the bankruptcy judges have clear statutory guidance 
that the purpose of Chapter 11 is--to the greatest extent possible--
maximize assets so as to preserve jobs.
  I will urge prompt consideration of this legislation by the 
Subcommittee on Commercial and Administrative Law and further 
proceedings by the House Judiciary Committee.

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