[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7370 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 7370
To amend title 11, United States Code, to improve protections for
employees and retirees in business bankruptcies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 25, 2020
Mr. Nadler (for himself, Mr. Norcross, Mr. Cicilline, Mrs. Demings, Mr.
Johnson of Georgia, Ms. Jayapal, Ms. Scanlon, Ms. Dean, and Ms. Garcia
of Texas) introduced the following bill; which was referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 11, United States Code, to improve protections for
employees and retirees in business bankruptcies.
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.
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.
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 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; 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 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 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. 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: ``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.''.
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).''; 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;
``(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--
(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:
``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.''.
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).''.
<all>