[Congressional Record Volume 166, Number 117 (Thursday, June 25, 2020)]
[Senate]
[Pages S3314-S3319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DURBIN (for himself, Mr. Whitehouse, Ms. Klobuchar, Ms. 
        Harris, Mr. Brown, Mr. Schatz, and Mr. Merkley):
  S. 4089. 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 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. 4089

       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 
     2020''.
       (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 and contributions to employee 
              benefit plans.
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.
Sec. 208. Claim for withdrawal liability.

         TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS

Sec. 301. Executive compensation upon exit from bankruptcy.
Sec. 302. Limitations on executive compensation enhancements.
Sec. 303 Prohibition against special compensation payments.
Sec. 304. Assumption of executive benefit plans.
Sec. 305. Recovery of executive compensation.
Sec. 306. Preferential compensation transfer.

                       TITLE IV--OTHER PROVISIONS

Sec. 401. Union proof of claim.
Sec. 402. Exception from automatic stay.
Sec. 403. Effect on collective bargaining agreements under the Railway 
              Labor Act.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) Business bankruptcies have increased sharply in recent 
     years and remain at high levels due to the impact of the 
     COVID-19 pandemic. 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

[[Page S3315]]

     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 redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively;
       (B) in the matter preceding clause (i), as so redesignated, 
     by inserting ``(A)'' before ``Fourth'';
       (C) in subparagraph (A), as so designated, in the matter 
     preceding clause (i), as so redesignated--
       (i) by striking ``$10,000'' and inserting ``$20,000'';
       (ii) by striking ``within 180 days''; and
       (iii) by striking ``or the date of the cessation of the 
     debtor's business, whichever occurs first,''; and
       (D) by adding at the end the following:
       ``(B) Severance pay described in subparagraph (A)(i) shall 
     be deemed earned in full upon the layoff or termination of 
     employment of the individual to whom the severance is 
     owed.'';
       (2) in paragraph (5)--
       (A) in subparagraph (A)--
       (i) by striking ``within 180 days''; and
       (ii) by striking ``or the date of the cessation of the 
     debtor's business, whichever occurs first''; and
       (B) 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 striking the period at the end 
     and inserting ``; or''; 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, if--
       ``(i) the equity securities 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))) for the benefit of an individual who is not an 
     insider, a senior executive officer, or any of the 20 highest 
     compensated employees of the debtor who are not insiders or 
     senior executive officers;
       ``(ii) the equity 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; and
       ``(iii) 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 AND CONTRIBUTIONS TO 
                   EMPLOYEE BENEFIT PLANS.

       Section 503(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (8)(B), by striking ``and'' at the end;
       (2) in paragraph (9), by striking the period and inserting 
     a semicolon; and
       (3) by adding at the end the following:
       ``(10) severance pay owed to employees of the debtor (other 
     than to an insider of the debtor, a senior executive officer 
     of the debtor, the 20 highest compensated employees of the 
     debtor who are not insiders or senior executive officers, any 
     department or division manager of the debtor, or any 
     consultant providing 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; and
       ``(11) any contribution to an employee benefit plan that is 
     due on or after the date of the filing of the petition; 
     and''.

     SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RETIREES.

       Section 1129(a) of title 11, United States Code is 
     amended--
       (1) 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 the effective 
     date of the plan 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).''; and
       (2) 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).''.

     SEC. 105. PRIORITY FOR WARN ACT DAMAGES.

       Section 503(b)(1)(A)(ii) of title 11, United States Code is 
     amended by inserting ``any back pay, civil penalty, or 
     damages for a violation of any Federal or State labor and 
     employment law, including the Worker Adjustment and 
     Retraining Notification Act (29 U.S.C. 2101 et seq.) and any 
     comparable State law,'' before ``wages and benefits''.

           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 as provided in 
     section 103(m) for collective bargaining agreements covered 
     by the Railway Labor Act (45 U.S.C. 151 et seq.), may reject 
     a collective bargaining agreement only in accordance with 
     this section. In this section, a reference to the trustee 
     includes 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, the trustee shall provide notice to the 
     labor organization representing the employees covered by the 
     collective bargaining agreement that modifications are being 
     proposed under this section, and shall promptly provide an 
     initial proposal for modifications to the collective 
     bargaining 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 the collective bargaining 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 position of the debtor with respect to the 
     competitors in the industry of the debtor, subject to the 
     needs of the labor organization to evaluate the proposals of 
     the trustee and any application for rejection of the 
     collective bargaining 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 collective bargaining 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 collective bargaining 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 collective bargaining 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

[[Page S3316]]

     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 collective bargaining 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 collective bargaining 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 subsection (c)(3)(B);
       ``(C) the court finds that further negotiations regarding 
     the proposal of the trustee or an alternative proposal by the 
     labor organization are not likely to produce an agreement;
       ``(D) the court finds that implementation of the proposal 
     of the trustee shall not--
       ``(i) cause a material diminution in the purchasing power 
     of the employees covered by the collective bargaining 
     agreement;
       ``(ii) adversely affect the ability of the debtor to retain 
     an experienced and qualified workforce; or
       ``(iii) impair the labor relations of the debtor such that 
     the ability to achieve a feasible reorganization would be 
     compromised; and
       ``(E) the court concludes that rejection of the collective 
     bargaining agreement and immediate implementation of the 
     proposal of the trustee 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, during the bankruptcy, the trustee has 
     implemented a program of incentive pay, bonuses, or other 
     financial returns for an insider of the debtor, a senior 
     executive officer of the debtor, any of the 20 highest 
     compensated employees of the debtor who are not insiders or 
     senior executive officers, any department or division manager 
     of the debtor, or any consultant providing services to the 
     debtor, 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 a collective bargaining agreement entered into 
     between the trustee and the labor organization providing 
     mutually satisfactory modifications, at any time after that 
     collective bargaining 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 during which a collective bargaining 
     agreement at issue under this section continues in effect and 
     a motion for rejection of the collective bargaining agreement 
     has been filed, if essential to the continuation of the 
     business of the debtor 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 and may be 
     authorized for not more than 14 days in total.
       ``(f)(1) Rejection of a collective bargaining agreement 
     constitutes a breach of the collective bargaining agreement, 
     and shall be effective no earlier than the entry of an order 
     granting such relief.
       ``(2) Notwithstanding paragraph (1), 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 ``, without regard to 
     whether 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 ``, and a labor 
     organization serving as the authorized representative under 
     subsection (c)(1),'' after ``section'';
       (3) by striking subsection (f) and inserting the following:
       ``(f)(1) If a trustee seeks modification of retiree 
     benefits, 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 position of 
     the debtor with respect to the competitors in the industry of 
     the debtor, subject to the needs of the authorized 
     representative to evaluate the proposals of the trustee 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 the subsection designation 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, 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 proposal of the trustee 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 proposal of the trustee 
     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, during the bankruptcy, a trustee has implemented 
     a program of incentive pay, bonuses, or other financial 
     returns for insiders of the debtor, senior executive officers 
     of the debtor, the 20 highest compensated employees of the 
     debtor who are not insiders or senior executive officers, any 
     department or division managers of the debtor, or any 
     consultants providing services to the debtor, or such a 
     program was implemented within 180

[[Page S3317]]

     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 (f)(3)(C).''; and
       (B) in the matter following paragraph (3)--
       (i) by striking ``except that in no case'' and inserting 
     the following:
       ``(4) In no case''; and
       (ii) by striking ``is consistent with the standard set 
     forth in paragraph (3)'' and inserting ``assures that all 
     creditors, the debtor, and all of the affected parties are 
     treated fairly and equitably, and is clearly favored by the 
     balance of the equities'';
       (5) in subsection (h)(1), by inserting ``for a period of 
     not longer than 14 days'' before the period; and
       (6) 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.

       (a) Requirement to Preserve Jobs and Maintain Terms and 
     Conditions of Employment.--Section 363 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(q)(1) In approving a sale or lease of property of the 
     estate under this section or a plan under chapter 11, the 
     court shall give substantial weight to the extent to which a 
     prospective purchaser or lessee of the property will--
       ``(A) preserve the jobs of the employees of the debtor;
       ``(B) maintain the terms and conditions of employment of 
     the employees of the debtor; and
       ``(C) assume or match the pension and health benefit 
     obligations of the debtor to the retirees of the debtor.
       ``(2) If there are 2 or more offers to purchase or lease 
     property of the estate under this section or a plan under 
     chapter 11, the court shall approve the offer of the 
     prospective purchaser or lessee that will best carry out the 
     actions described in subparagraphs (A) through (C) of 
     paragraph (1).''.
       (b) Chapter 11 Plans.--Section 1129(a) of title 11, United 
     States Code is amended by adding at the end the following:
       ``(17) If the plan provides for the sale of all or 
     substantially all of the property of the estate, the plan 
     requires the purchaser of the sale to carry out the actions 
     described in subparagraphs (A) through (C) of section 
     363(q)(1).''.

     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 (29 U.S.C. 1341, 
     1342), 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 
     that Act (29 U.S.C. 1342), 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--
       (1) by adding ``(1)'' after ``(c)''; and
       (2) by adding at the end the following:
       ``(2) If one or more employees of the debtor have not 
     received wages, accrued vacation, severance, or any other 
     compensation owed under a plan, program, policy or practice 
     of the debtor, or pursuant to the terms of a collective 
     bargaining agreement, for services rendered on or after the 
     date of the commencement of the case, or the debtor has not 
     made a contribution due under an employee benefit plan on or 
     after the date of the commencement of the case, such unpaid 
     obligations shall be deemed reasonable, necessary costs and 
     expenses of preserving, or disposing of, property securing an 
     allowed secured claim and benefitting the holder of the 
     allowed secured claim, and shall be recovered by the trustee 
     for payment to the employees or the employee benefit plan, as 
     applicable, even if the trustee, or a successor or 
     predecessor in interest 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.

       Chapter 11 of 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) in subsection (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 assets of the debtor and 
     preserves jobs that sustain productive economic activity.''; 
     and
       (B) in subsection (c)--
       (i) by inserting ``(1)'' after ``(c)''; and
       (ii) by striking the last sentence and inserting the 
     following:
       ``(2) 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--
       ``(A) consider the extent to which each plan would preserve 
     going concern value through the productive use of the assets 
     of the debtor and the preservation of jobs that sustain 
     productive economic activity; and
       ``(B) confirm the plan that better serves such interests.
       ``(3) 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
       (3) in the table of sections, by inserting before the item 
     relating to section 1101 the following:

``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--
       ``(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; and
       ``(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.''.

     SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY.

       Section 503(b) of title 11, United States Code, as amended 
     by section 103 of this Act, is amended by adding at the end 
     the following:
       ``(12) with respect to withdrawal liability owed to a 
     multiemployer pension plan for a complete or partial 
     withdrawal pursuant to section 4201 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1381) where 
     such withdrawal occurs on or after the commencement of the 
     case, an amount equal to the total benefits payable from such 
     pension plan that accrued as a result of employees' services 
     rendered to the debtor during the period beginning on the 
     date of commencement of the case and ending on the date of 
     the withdrawal from the plan.''.

         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)--
       (A) by adding ``(A)'' after ``(4)'';
       (B) in subparagraph (A), as so designated, by striking 
     ``Any payment'' and inserting ``Subject to subparagraph (B), 
     any payment''; and
       (C) by adding at the end the following:
       ``(B)(i) Subject to clause (ii), the plan does not provide 
     for payments or other distributions to, or for the benefit 
     of, an insider of the debtor, a senior executive officer of 
     the debtor, any of the 20 highest compensated employees of 
     the debtor who are not insiders or senior executive officers, 
     any department or division manager of the debtor, or any 
     consultant providing services to the debtor, unless--
       ``(I) the payments or other distributions are part of a 
     program that is generally applicable to all full-time 
     employees of the debtor; and
       ``(II) the payments or distributions do not exceed the 
     compensation limits established in section 503(c)(1) in 
     comparison to the nonmanagement workforce of the debtor.
       ``(ii) The requirement under clause (i) shall not apply to 
     the compensation described in paragraph (5)(C).'';
       (2) in paragraph (5)--
       (A) in subparagraph (A)(ii), by striking ``and'' at the 
     end;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(C) the compensation disclosed under subparagraph (B) has 
     been approved by, or is subject to the approval of, the court 
     as--
       ``(i) reasonable when compared to individuals holding 
     comparable positions at comparable companies in the same 
     industry as the debtor;
       ``(ii) not more than the amount corresponding to the 50th 
     percentile of the compensation of the individuals described 
     in clause (i); and
       ``(iii) not excessive or disproportionate in light of 
     economic losses of the nonmanagement workforce of the 
     debtor.''.

     SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.

       Section 503(c) of title 11, United States Code, is 
     amended--

[[Page S3318]]

       (1) In the matter preceding paragraph (1), by inserting 
     ``and subject to section 363(b)(3)'' after ``subsection 
     (b)'';
       (2) in paragraph (1)--
       (A) in the matter preceding subparagraph (A)--
       (i) by inserting ``, a senior executive officer of the 
     debtor, any the 20 highest compensated employees of the 
     debtor who are not insiders or senior executive officers, any 
     department or division manager of the debtor, or any 
     consultant providing services to the debtor'' before ``for 
     the purpose''; and
       (ii) 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,'';
       (B) by amending subparagraph (A) to read as follows:
       ``(A) the transfer or obligation is part of a program that 
     is generally applicable to all full-time employees of the 
     debtor; and'';
       (C) by striking subparagraph (B);
       (D) by redesignating subparagraph (C) as subparagraph (B);
       (E) in subparagraph (B), as so redesignated--
       (i) in clause (i), by striking ``10'' and inserting ``2''; 
     and
       (ii) in clause (ii)--

       (I) by striking ``25'' and inserting ``10''; and
       (II) by striking ``insider'' and inserting ``person'';

       (3) in paragraph (2)--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, a senior executive officer of the debtor, any of the 20 
     highest compensated employees of the debtor who are not 
     insiders or senior executive officers, any department or 
     division manager of the debtor, or any consultant providing 
     services to the debtor,'' before ``, unless''; and
       (B) in subparagraph (B), by striking ``10'' and inserting 
     ``2''; and
       (4) by amending paragraph (3) to read as follows:
       ``(3) other transfers or obligations to, or for the benefit 
     of, an insider of the debtor, a senior executive officer of 
     the debtor, the 20 highest compensated employees of the 
     debtor who are not insiders or senior executive officers, any 
     department or division manager of the debtor, or any 
     consultant providing services to the debtor that are outside 
     of the ordinary course of business, except as part of a plan 
     of reorganization and subject to the approval of the court 
     under paragraphs (4) and (5) of section 1129(a).''.

     SEC. 303. PROHIBITION AGAINST SPECIAL COMPENSATION PAYMENTS.

       Section 363 of title 11, United States Code, is amended--
       (1) in subsection (b), by adding at the end the following:
       ``(3) No plan, program, or other transfer or obligation to, 
     or for the benefit of, an insider of the debtor, a senior 
     executive officer of the debtor, the 20 highest compensated 
     employees of the debtor who are not insiders or senior 
     executive officers, any department or division manager of the 
     debtor, or any consultant providing services to the debtor 
     shall be approved if the debtor has, on or after the date 
     that is 1 year before the date of the filing of the 
     petition--
       ``(A) discontinued any plan, program, policy, or practice 
     of paying severance pay to the nonmanagement workforce of the 
     debtor; or
       ``(B) modified any plan, program, policy, or practice 
     described in subparagraph (A) in order to reduce benefits 
     under the plan, program, policy, or practice.''; and
       (2) in subsection (c)--
       (A) in paragraph (1), by striking ``If the business'' and 
     inserting ``Except as provided in paragraph (5), if the 
     business''; and
       (B) by adding at the end the following:
       ``(5) In the case of a transaction that is a transfer or 
     obligation described in paragraphs (1) through (3) of section 
     503(c), the trustee shall obtain the prior approval of the 
     court after notice and an opportunity for a hearing.''.

     SEC. 304. 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 an insider of the debtor, a senior executive officer of 
     the debtor, or any of the 20 highest compensated employees of 
     the debtor who are not insiders or senior executive officers 
     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 
     (29 U.S.C. 1341, 1342), on or after the date that is 1 year 
     before the date of the commencement of the case.
       ``(r) No plan, fund, program, or contract to provide 
     retiree benefits for insiders of the debtor, senior executive 
     officers of the debtor, or the 20 highest compensated 
     employees of the debtor who are not insiders or senior 
     executive officers 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 has otherwise 
     reduced or eliminated health benefits for employees or 
     retirees of the debtor on are after the date that is 1 year 
     before the date of the commencement of the case.''.

     SEC. 305. RECOVERY OF EXECUTIVE COMPENSATION.

       (a) In General.--Subchapter III of chapter 5 of 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 section 1113(d) 
     or section 1114(g), 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 obligations of the debtor 
     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 (29 U.S.C. 1341, 1342), 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 that 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 (29 U.S.C. 
     1341, 1342), 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 section 
     1113(d), or section 1114(g), 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 (29 U.S.C. 1301 et seq.) 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) of this section if there is a reasonable 
     likelihood that such compensation is intended to reimburse or 
     replace compensation recovered by the estate under this 
     section.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 5 of title 11, United States Code, is 
     amended by inserting after the item relating to section 562 
     the following:

``563. Recovery of executive compensation.''.

     SEC. 306. PREFERENTIAL COMPENSATION TRANSFER.

       Section 547 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(j)(1) The trustee may avoid a transfer--
       ``(A) made--
       ``(i) to, or for the benefit of, an insider of the debtor 
     (including an obligation incurred for the benefit of an 
     insider under an employment contract), a senior executive 
     officer of the debtor, the 20 highest compensated employees 
     of the debtor who are not insiders or senior executive 
     officers, any department or division manager of the debtor, 
     or any consultant providing services to the debtor made in 
     anticipation of bankruptcy; or
       ``(ii) 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); and
       ``(B) made or incurred on or within 1 year before the 
     filing of the petition.
       ``(2) No provision of subsection (c) shall constitute a 
     defense against the recovery of a transfer described in 
     paragraph (1).
       ``(3) The trustee or a committee appointed pursuant to 
     section 1102 may commence an action to recover a transfer 
     described in paragraph (1), except that, if neither the 
     trustee nor such committee commences an action to recover the 
     transfer by the time of the commencement of a hearing on the 
     confirmation of a plan under section 1129, any

[[Page S3319]]

     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 inserting after paragraph (28) 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. 403. EFFECT ON COLLECTIVE BARGAINING AGREEMENTS UNDER 
                   THE RAILWAY LABOR ACT.

       Section 103 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(m) Notwithstanding sections 365, 1113, or 1114, neither 
     the court nor the trustee may change the wages, working 
     conditions, or retirement benefits of an employee or a 
     retiree of the debtor established by a collective bargaining 
     agreement that is subject to the Railway Labor Act (45 U.S.C. 
     151 et seq.), except in accordance with section 6 of that Act 
     (45 U.S.C. 156).''.

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