[Congressional Record (Bound Edition), Volume 149 (2003), Part 12]
[Extensions of Remarks]
[Page 16894]
[From the U.S. Government Publishing Office, www.gpo.gov]



[[Page 16894]]

                          EXTENSIONS OF REMARKS

 THE INTRODUCTION OF THE ``EQUAL TREATMENT OF PENSIONS AND BANKRUPTCY 
                             ACT OF 2003''

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                        Thursday, June 26, 2003

  Mr. CONYERS. Mr. Speaker, today, I am introducing the ``Equal 
Treatment of Pensions and Bankruptcy Act of 2003'' to eliminate an 
unfair and abusive practice that has allowed corporate insiders to 
protect their exorbitant pensions even as their employees jobs and 
retirement savings are obliterated in bankruptcy.
  Recently, some in top corporate management have attempted to insulate 
their pension benefits by placing them in a trust that would be beyond 
the reach of the bankruptcy court. As a result, while employees lose 
their jobs, pensions, and other benefits, these insiders are able to 
walk away from the bankrupt company with a substantial windfall. This 
immoral tactic does not benefit the rehabilitation of the business. To 
the contrary, it loots the company of assets that could be used to pay 
creditors, employees, and help the company successfully emerge from 
bankruptcy. It is bad for business, it is bad for unpaid creditors, it 
is bad for the families who are shattered by the failure of a company.
  This is an ongoing problem. In April, American Airlines enraged 
employees by threatening to shut down the company if they didn't accept 
billions in steep pay and benefit cuts, while secretly setting aside 
millions in pension guarantees for top executives. Although CEO Donald 
Carty resigned in April, American has kept its executive pension plan.
  The legislation provides that if the company places any supplemental 
retirement benefits or deferred compensation in a trust for the benefit 
of management or another insider, the court will have the authority to 
reclaim those funds for the benefit of the creditors, including the 
employees. It also clarifies that a party with an interest in the case 
or a committee of creditors may bring a motion to reclaim these funds 
if the trustee or the debtor in possession consents for fails to bring 
such a motion. While these parties are now permitted to bring such 
motions, as recently reaffirmed by the U.S. Court of Appeals for the 
Third Circuit in the Cybergenics case, this bill reaffirms that right 
under the Code.
  This is pattern of abuse is becoming ever more widespread. We must 
protect the livelihood of the average American worker and their 
families and ensure that top executives are not allowed to pillage a 
firm and enjoy protection in bankruptcy that would be denied to the 
people who are least to blame for the bankruptcy.

                          ____________________