[Congressional Record Volume 171, Number 64 (Wednesday, April 9, 2025)]
[Senate]
[Pages S2523-S2528]
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. Hawley, Mr. Schatz, Ms.
Duckworth, Ms. Klobuchar, and Mr. Whitehouse):
S. 1381. 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. 1381
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
2025''.
(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. These bankruptcies include
several of the largest business bankruptcy filings in
history. As the use of bankruptcy has expanded, job
preservation and retirement security are placed at greater
risk.
(2) Laws enacted to improve recoveries for employees and
retirees and limit their losses in bankruptcy cases have not
kept pace with the increasing and broader use of bankruptcy
by businesses in all sectors of the economy. However, while
protections for employees and retirees in bankruptcy cases
have eroded, management compensation plans devised for those
in charge of troubled businesses have become more prevalent
and are escaping adequate scrutiny.
(3) Changes in the law regarding these matters are urgently
needed as bankruptcy is used to address increasingly more
complex and diverse conditions affecting troubled businesses
and industries.
TITLE I--IMPROVING RECOVERIES FOR EMPLOYEES AND RETIREES
SEC. 101. INCREASED WAGE PRIORITY.
Section 507(a) of title 11, United States Code, is
amended--
(1) in paragraph (4)--
(A) by 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.''; and
(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.''.
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, and'' before ``wages and benefits''
each place that term appears.
[[Page S2524]]
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 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
[[Page S2525]]
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 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 two 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. 1322), 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 case under this chapter involving a debtor that is not
an individual 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 of this
Act, by adding at the end the following:
``(18) If the plan contemplates continuation of the
debtor's business, the proponent of the plan 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
[[Page S2526]]
(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
multi-employer 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, as amended
by sections 104 and 206 of this Act, 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).''; and
(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; and
``(ii) 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--
(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);
and
(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, as amended by
section 203 of this Act, 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.
[[Page S2527]]
``(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, based on reasonable due diligence
in the circumstances of the case, 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 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 (28), by striking ``and'' at the end;
(2) in paragraph (29), by striking the period at the end
and inserting ``; and''; and
(3) by inserting after paragraph (29) the following:
``(30) 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).''.
______
By Mr. REED (for himself and Mr. Young):
S. 1400. A bill to amend the Adult Education and Family Literacy Act
and the Workforce Innovation and Opportunity Act to strengthen adult
education; to the Committee on Health, Education, Labor, and Pensions.
Mr. REED. Mr. President, we have a longstanding adult literacy crisis
that affects the quality of life for individuals and families and holds
our economy back, and the latest international assessments show that it
is only getting worse. It is time for a major expansion of adult
education. Today, I am proud to introduce bipartisan legislation--the
Adult Education Workforce Opportunity and Reskilling for Knowledge and
Success Act--or the Adult Education WORKS Act--with my colleague
Senator Young.
Adult education provides numeracy, literacy, digital literacy,
English language skills, work readiness, soft skills, high school
equivalency, and numerous wraparound services to millions of adult
learners nationwide. These essential skills can make the difference
between earning a family-sustaining wage and struggling to make ends
meet. A study commissioned by the Barbara Bush Foundation estimated
that getting all U.S. adults to the equivalent of a sixth grade reading
level would generate an additional $2.2 trillion in annual income for
the country. Without the opportunities provided through adult education
programs, many adults will be left on the sidelines.
The latest results for U.S. adults on the Program for the
International Assessment of Adult Competencies, PIAAC, are sobering.
Between 2017 and 2023, literacy and numeracy skills sank, with the
percentage of adults at the lowest performance levels increasing from
19 to 28 percent in literacy and from 29 to 34 percent in numeracy.
Building a sustainable economy that truly works for everyone is going
to require helping these individuals acquire the basic skills they need
to succeed. Unfortunately, we are reaching only a fraction of these
individuals today. A recent study from the Adult Literacy and Learning
Impact Network, found that over 80 percent of the adults surveyed
indicated a strong or moderate interest in developing their skills, but
only 20 percent reported knowing about existing programs in their
communities. At current funding levels, the Department of Education
reports that 1.1 million individuals were served, with over one-third
of programs reporting waiting lists.
In my home State of Rhode Island, there are over 61,000 adults who
could benefit from English language instruction and nearly 64,000
working-age adults without a high school credential. Yet, under current
funding levels, the adult education program serves just over 5,100
individuals.
The Adult Education WORKS Act provides a roadmap for addressing this
crisis. It calls for increased resources, nearly doubling funding for
adult education by 2030. At the same time, it makes significant
improvements to the adult education system. It calls for a new emphasis
on digital and information literacy, which are essential for success in
the workplace and in navigating everyday life. It enhances the role of
adult education providers, with a special focus on public libraries and
community-based organizations throughout the workforce development
system, ensuring coordination and efficient use of resources. It
invests in the professionalization of the adult education field,
strengthening State certification policies, encouraging full-time
staffing models, and expanding professional development opportunities
and career pathways for adult educators. It provides support for
college and career navigators in public libraries and community-based
organizations to support adult learners where they live. Finally, it
invests in innovation and accountability through pilot projects that
test new approaches for measuring program performance and learner
outcomes.
[[Page S2528]]
In developing this legislation, Senator Young and I worked closely
with key stakeholders, who are on the frontlines in the adult education
community. I am pleased to count the American Library Association, the
Center for Law and Social Policy, the Coalition on Adult Basic
Education, the National Coalition for Literacy, National Skills
Coalition, ProLiteracy, the TESOL, Teaching English to Speakers of
Other Languages, International Association, and the Urban Libraries
Council among the supporters of this legislation.
I urge my colleagues to cosponsor this legislation and work with us
to ensure it is passed on its own or as part of legislation to
reauthorize the Workforce Innovation and Opportunity Act.
____________________