[Congressional Record Volume 153, Number 143 (Tuesday, September 25, 2007)]
[Senate]
[Pages S12063-S12067]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Kennedy, Mr. Feingold, and Mr. 
        Obama):
  S. 2092. A bill to amend title 11, United States Code, to improve 
protections for employees and retirees in business bankruptcies; to the 
Committee on the Judiciary.
  Mr. DURBIN. Mr. President, I rise today to support this Nations' 
workers, who deserve better treatment than they currently experience 
when their employers fail them.
  We all remember what happened with Enron. Thousands of workers toiled 
over decades to slowly build up good, solid companies of which they 
could be proud. Then, in just a few short years, these companies were 
bought up by a conglomerate and run into the ground.
  Enron went bankrupt and, just like that, the workers and retirees who 
spent their lives building something lost their jobs, their benefits, 
and most of their pensions. Our bankruptcy system helped facilitate 
that loss.
  It is not just Enron. Workers and retirees are always near the back 
of the line when their companies go into bankruptcy. Some firms have 
gone into bankruptcy at least in part because companies can walk away 
forever from some of their obligations to their employees.
  Today I am introducing the Protecting Employees and Retirees in 
Business Bankruptcies Act, along with Senators Kennedy and Feingold. I 
am pleased that Chairman Conyers of the House Judiciary Committee will 
be introducing the House companion.
  The Protecting Employees and Retirees in Business Bankruptcies Act 
will increase the value of worker claims in bankruptcy. The bill 
doubles the maximum value of wage claims for each worker to $20,000; 
allows a second claim of up to $20,000 for benefits earned; eliminates 
the requirement that employees earn wage and benefit claims within 180 
days of the bankruptcy filing; creates a new priority claim for the 
loss in value of workers' pensions; and establishes a new priority 
administrative expense for workers' collective severance pay.
  The bill also will reduce the loss of wages and benefits. It protects 
the value of collective bargaining agreements by limiting the 
situations in which they can be rejected and by tightening the criteria 
by which they can be amended. It also protects retiree benefits and 
ensures that bidders for assets of the bankrupt company that promise to 
honor back wages, vacation time, and other benefits are considered 
favorably.
  Finally, the bill will increase the parity of worker and executive 
claims. For example, the bill prohibits deferred executive compensation 
in situations where employee compensation plans have been terminated in 
bankruptcy.
  No longer will executives and insiders be able to pay themselves huge 
bonuses in the midst of slashing payroll and benefit costs.
  No longer will consultants receive huge fees while retirees are 
losing most of their pensions.
  No longer will companies be able to sell off all of the assets that 
make the company worthwhile, and yet refuse to use those proceeds to 
support the workers who have lost their livelihoods.
  I am proud to introduce this legislation with Senators Kennedy and 
Feingold, and I thank the AFL-CIO and all of its workers for their 
wholehearted support.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2092

       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

[[Page S12064]]

     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);

[[Page S12065]]

       ``(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

[[Page S12066]]

       (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--

[[Page S12067]]

       (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).''.

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