I 

118TH CONGRESS 

2D SESSION H. R. 10538 

To amend title 11, United States Code, to improve protections for employees 

and retirees in business bankruptcies. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 19, 2024 

Mr. NADLER (for himself and Mr. CORREA) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Protecting Employees and Retirees in Business Bank6 ruptcies Act of 2024’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—IMPROVING RECOVERIES FOR EMPLOYEES AND 

RETIREES 


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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. 

1 SEC. 2. FINDINGS. 

2 The Congress finds the following: 

3 (1) Business bankruptcies have increased 

4 sharply in recent years and remain at high levels. 

5 These bankruptcies include several of the largest 

6 business bankruptcy filings in history. As the use of 

7 bankruptcy has expanded, job preservation and re8 tirement security are placed at greater risk. 

9 (2) Laws enacted to improve recoveries for em10 ployees and retirees and limit their losses in bank11 ruptcy cases have not kept pace with the increasing 


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1 and broader use of bankruptcy by businesses in all 

2 sectors of the economy. However, while protections 

3 for employees and retirees in bankruptcy cases have 

4 eroded, management compensation plans devised for 

5 those in charge of troubled businesses have become 

6 more prevalent and are escaping adequate scrutiny. 

7 (3) Changes in the law regarding these matters 

8 are urgently needed as bankruptcy is used to ad9 dress increasingly more complex and diverse condi10 tions affecting troubled businesses and industries. 

11 TITLE I—IMPROVING RECOV12 ERIES FOR EMPLOYEES AND 

13 RETIREES 

14 SEC. 101. INCREASED WAGE PRIORITY. 

15 Section 507(a) of title 11, United States Code, is 

16 amended— 

17 (1) in paragraph (4)— 

18 (A) by redesignating subparagraphs (A) 

19 and (B) as clauses (i) and (ii), respectively; 

20 (B) in the matter preceding clause (i), as 

21 so redesignated, by inserting ‘‘(A)’’ before 

22 ‘‘Fourth’’; 

23 (C) in subparagraph (A), as so designated, 

24 in the matter preceding clause (i), as so redes25 ignated— 


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1 (i) by striking ‘‘$10,000’’ and insert2 ing ‘‘$20,000’’; 

3 (ii) by striking ‘‘within 180 days’’; 

4 and 

5 (iii) by striking ‘‘or the date of the 

6 cessation of the debtor’s business, which7 ever occurs first,’’; and 

8 (D) by adding at the end the following: 

9 ‘‘(B) Severance pay described in subparagraph 

10 (A)(i) shall be deemed earned in full upon the layoff 

11 or termination of employment of the individual to 

12 whom the severance is owed.’’; and 

13 (2) in paragraph (5)— 

14 (A) in subparagraph (A)— 

15 (i) by striking ‘‘within 180 days’’; and 

16 (ii) by striking ‘‘or the date of the 

17 cessation of the debtor’s business, which18 ever occurs first’’; and 

19 (B) by striking subparagraph (B) and in20 serting the following: 

21 ‘‘(B) for each such plan, to the extent of 

22 the number of employees covered by each such 

23 plan, multiplied by $20,000.’’. 


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1 SEC. 102. CLAIM FOR STOCK VALUE LOSSES IN DEFINED 

2 CONTRIBUTION PLANS. 

3 Section 101(5) of title 11, United States Code, is 

4 amended— 

5 (1) in subparagraph (A), by striking ‘‘or’’ at 

6 the end; 

7 (2) in subparagraph (B), by striking the period 

8 at the end and inserting ‘‘; or’’; and 

9 (3) by adding at the end the following: 

10 ‘‘(C) right or interest in equity securities 

11 of the debtor, or an affiliate of the debtor, if— 

12 ‘‘(i) the equity securities are held in a 

13 defined contribution plan (within the 

14 meaning of section 3(34) of the Employee 

15 Retirement Income Security Act of 1974 

16 (29 U.S.C. 1002(34))) for the benefit of 

17 an individual who is not an insider, a sen18 ior executive officer, or any of the 20 high19 est compensated employees of the debtor 

20 who are not insiders or senior executive of21 ficers; 

22 ‘‘(ii) the equity securities were attrib23 utable to either employer contributions by 

24 the debtor or an affiliate of the debtor, or 

25 elective deferrals (within the meaning of 

26 section 402(g) of the Internal Revenue 


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1 Code of 1986), and any earnings thereon; 

2 and 

3 ‘‘(iii) an employer or plan sponsor 

4 who has commenced a case under this title 

5 has committed fraud with respect to such 

6 plan or has otherwise breached a duty to 

7 the participant that has proximately 

8 caused the loss of value.’’. 

9 SEC. 103. PRIORITY FOR SEVERANCE PAY AND CONTRIBU10 TIONS TO EMPLOYEE BENEFIT PLANS. 

11 Section 503(b) of title 11, United States Code, is 

12 amended— 

13 (1) in paragraph (8)(B), by striking ‘‘and’’ at 

14 the end; 

15 (2) in paragraph (9), by striking the period and 

16 inserting a semicolon; and 

17 (3) by adding at the end the following: 

18 ‘‘(10) severance pay owed to employees of the 

19 debtor (other than to an insider of the debtor, a sen20 ior executive officer of the debtor, the 20 highest 

21 compensated employees of the debtor who are not in22 siders or senior executive officers, any department or 

23 division manager of the debtor, or any consultant 

24 providing services to the debtor), under a plan, pro25 gram, or policy generally applicable to employees of 


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1 the debtor (but not under an individual contract of 

2 employment), or owed pursuant to a collective bar3 gaining agreement, for layoff or termination on or 

4 after the date of the filing of the petition, which pay 

5 shall be deemed earned in full upon such layoff or 

6 termination of employment; and 

7 ‘‘(11) any contribution to an employee benefit 

8 plan that is due on or after the date of the filing of 

9 the petition.’’. 

10 SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RE11 TIREES. 

12 Section 1129(a) of title 11, United States Code is 

13 amended— 

14 (1) by striking paragraph (13) and inserting 

15 the following: 

16 ‘‘(13) With respect to retiree benefits, as that 

17 term is defined in section 1114(a), the plan— 

18 ‘‘(A) provides for the continuation after 

19 the effective date of the plan of payment of all 

20 retiree benefits at the level established pursuant 

21 to subsection (e)(1)(B) or (g) of section 1114 

22 at any time before the date of confirmation of 

23 the plan, for the duration of the period for 

24 which the debtor has obligated itself to provide 

25 such benefits, or if no modifications are made 


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1 before confirmation of the plan, the continu2 ation of all such retiree benefits maintained or 

3 established in whole or in part by the debtor be4 fore the date of the filing of the petition; and 

5 ‘‘(B) provides for recovery of claims arising 

6 from the modification of retiree benefits or for 

7 other financial returns, as negotiated by the 

8 debtor and the authorized representative (to the 

9 extent that such returns are paid under, rather 

10 than outside of, a plan).’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(17) The plan provides for recovery of dam13 ages payable for the rejection of a collective bar14 gaining agreement, or for other financial returns as 

15 negotiated by the debtor and the authorized rep16 resentative under section 1113 (to the extent that 

17 such returns are paid under, rather than outside of, 

18 a plan).’’. 

19 SEC. 105. PRIORITY FOR WARN ACT DAMAGES. 

20 Section 503(b)(1)(A)(ii) of title 11, United States 

21 Code is amended by inserting ‘‘any back pay, civil penalty, 

22 or damages for a violation of any Federal or State labor 

23 and employment law, including the Worker Adjustment 

24 and Retraining Notification Act (29 U.S.C. 2101 et seq.) 


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1 and any comparable State law, and’’ before ‘‘wages and 

2 benefits’’ each place that term appears. 

3 TITLE II—REDUCING EMPLOY4 EES’ AND RETIREES’ LOSSES 

5 SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREE6 MENTS. 

7 Section 1113 of title 11, United States Code, is 

8 amended by striking subsections (a) through (f) and in9 serting the following: 

10 ‘‘(a) The debtor in possession, or the trustee if one 

11 has been appointed under this chapter, other than as pro12 vided in section 103(m) for collective bargaining agree13 ments covered by the Railway Labor Act (45 U.S.C. 151 

14 et seq.), may reject a collective bargaining agreement only 

15 in accordance with this section. In this section, a reference 

16 to the trustee includes the debtor in possession. 

17 ‘‘(b) No provision of this title shall be construed to 

18 permit the trustee to unilaterally terminate or alter any 

19 provision of a collective bargaining agreement before com20 plying with this section. The trustee shall timely pay all 

21 monetary obligations arising under the terms of the collec22 tive bargaining agreement. Any such payment required to 

23 be made before a plan confirmed under section 1129 is 

24 effective has the status of an allowed administrative ex25 pense under section 503. 


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1 ‘‘(c)(1) If the trustee seeks modification of a collec2 tive bargaining agreement, the trustee shall provide notice 

3 to the labor organization representing the employees cov4 ered by the collective bargaining agreement that modifica5 tions are being proposed under this section, and shall 

6 promptly provide an initial proposal for modifications to 

7 the collective bargaining agreement. Thereafter, the trust8 ee shall confer in good faith with the labor organization, 

9 at reasonable times and for a reasonable period in light 

10 of the complexity of the case, in attempting to reach mutu11 ally acceptable modifications of the collective bargaining 

12 agreement. 

13 ‘‘(2) The initial proposal and subsequent proposals 

14 by the trustee for modification of a collective bargaining 

15 agreement shall be based upon a business plan for the re16 organization of the debtor, and shall reflect the most com17 plete and reliable information available. The trustee shall 

18 provide to the labor organization all information that is 

19 relevant for negotiations. The court may enter a protective 

20 order to prevent the disclosure of information if disclosure 

21 could compromise the position of the debtor with respect 

22 to the competitors in the industry of the debtor, subject 

23 to the needs of the labor organization to evaluate the pro24 posals of the trustee and any application for rejection of 


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1 the collective bargaining agreement or for interim relief 

2 pursuant to this section. 

3 ‘‘(3) In consideration of Federal policy encouraging 

4 the practice and process of collective bargaining and in 

5 recognition of the bargained-for expectations of the em6 ployees covered by the collective bargaining agreement, 

7 modifications proposed by the trustee— 

8 ‘‘(A) shall be proposed only as part of a pro9 gram of workforce and nonworkforce cost savings 

10 devised for the reorganization of the debtor, includ11 ing savings in management personnel costs; 

12 ‘‘(B) shall be limited to modifications designed 

13 to achieve a specified aggregate financial contribu14 tion for the employees covered by the collective bar15 gaining agreement (taking into consideration any 

16 labor cost savings negotiated within the 12-month 

17 period before the filing of the petition), and shall be 

18 not more than the minimum savings essential to per19 mit the debtor to exit bankruptcy, such that con20 firmation of a plan of reorganization is not likely to 

21 be followed by the liquidation, or the need for fur22 ther financial reorganization, of the debtor (or any 

23 successor to the debtor) in the short term; and 

24 ‘‘(C) shall not be disproportionate or overly bur25 den the employees covered by the collective barVerDate Sep 11 2014 02:13 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H10538.IH H10538

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1 gaining agreement, either in the amount of the cost 

2 savings sought from such employees or the nature of 

3 the modifications. 

4 ‘‘(d)(1) If, after a period of negotiations, the trustee 

5 and the labor organization have not reached an agreement 

6 over mutually satisfactory modifications, and further ne7 gotiations are not likely to produce mutually satisfactory 

8 modifications, the trustee may file a motion seeking rejec9 tion of the collective bargaining agreement after notice 

10 and a hearing. Absent agreement of the parties, no such 

11 hearing shall be held before the expiration of the 21-day 

12 period beginning on the date on which notice of the hear13 ing is provided to the labor organization representing the 

14 employees covered by the collective bargaining agreement. 

15 Only the debtor and the labor organization may appear 

16 and be heard at such hearing. An application for rejection 

17 shall seek rejection effective upon the entry of an order 

18 granting the relief. 

19 ‘‘(2) In consideration of Federal policy encouraging 

20 the practice and process of collective bargaining and in 

21 recognition of the bargained-for expectations of the em22 ployees covered by the collective bargaining agreement, the 

23 court may grant a motion seeking rejection of a collective 

24 bargaining agreement only if, based on clear and con25 vincing evidence— 


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1 ‘‘(A) the court finds that the trustee has com2 plied with the requirements of subsection (c); 

3 ‘‘(B) the court has considered alternative pro4 posals by the labor organization and has concluded 

5 that such proposals do not meet the requirements of 

6 subsection (c)(3)(B); 

7 ‘‘(C) the court finds that further negotiations 

8 regarding the proposal of the trustee or an alter9 native proposal by the labor organization are not 

10 likely to produce an agreement; 

11 ‘‘(D) the court finds that implementation of the 

12 proposal of the trustee shall not— 

13 ‘‘(i) cause a material diminution in the 

14 purchasing power of the employees covered by 

15 the collective bargaining agreement; 

16 ‘‘(ii) adversely affect the ability of the 

17 debtor to retain an experienced and qualified 

18 workforce; or 

19 ‘‘(iii) impair the labor relations of the 

20 debtor such that the ability to achieve a feasible 

21 reorganization would be compromised; and 

22 ‘‘(E) the court concludes that rejection of the 

23 collective bargaining agreement and immediate im24 plementation of the proposal of the trustee is essen25 tial to permit the debtor to exit bankruptcy, such 


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1 that confirmation of a plan of reorganization is not 

2 likely to be followed by liquidation, or the need for 

3 further financial reorganization, of the debtor (or 

4 any successor to the debtor) in the short term. 

5 ‘‘(3) If, during the bankruptcy, the trustee has imple6 mented a program of incentive pay, bonuses, or other fi7 nancial returns for an insider of the debtor, a senior exec8 utive officer of the debtor, any of the 20 highest com9 pensated employees of the debtor who are not insiders or 

10 senior executive officers, any department or division man11 ager of the debtor, or any consultant providing services 

12 to the debtor, or such a program was implemented within 

13 180 days before the date of the filing of the petition, the 

14 court shall presume that the trustee has failed to satisfy 

15 the requirements of subsection (c)(3)(C). 

16 ‘‘(4) In no case shall the court enter an order reject17 ing a collective bargaining agreement that would result in 

18 modifications to a level lower than the level proposed by 

19 the trustee in the proposal found by the court to have com20 plied with the requirements of this section. 

21 ‘‘(5) At any time after the date on which an order 

22 rejecting a collective bargaining agreement is entered, or 

23 in the case of a collective bargaining agreement entered 

24 into between the trustee and the labor organization pro25 viding mutually satisfactory modifications, at any time 


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1 after that collective bargaining agreement has been en2 tered into, the labor organization may apply to the court 

3 for an order seeking an increase in the level of wages or 

4 benefits, or relief from working conditions, based upon 

5 changed circumstances. The court shall grant the request 

6 only if the increase or other relief is not inconsistent with 

7 the standard set forth in paragraph (2)(E). 

8 ‘‘(e) During a period during which a collective bar9 gaining agreement at issue under this section continues 

10 in effect and a motion for rejection of the collective bar11 gaining agreement has been filed, if essential to the con12 tinuation of the business of the debtor or in order to avoid 

13 irreparable damage to the estate, the court, after notice 

14 and a hearing, may authorize the trustee to implement 

15 interim changes in the terms, conditions, wages, benefits, 

16 or work rules provided by the collective bargaining agree17 ment. Any hearing under this subsection shall be sched18 uled in accordance with the needs of the trustee. The im19 plementation of such interim changes shall not render the 

20 application for rejection moot and may be authorized for 

21 not more than 14 days in total. 

22 ‘‘(f)(1) Rejection of a collective bargaining agreement 

23 constitutes a breach of the collective bargaining agree24 ment, and shall be effective no earlier than the entry of 

25 an order granting such relief. 


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1 ‘‘(2) Notwithstanding paragraph (1), solely for pur2 poses of determining and allowing a claim arising from 

3 the rejection of a collective bargaining agreement, rejec4 tion shall be treated as rejection of an executory contract 

5 under section 365(g) and shall be allowed or disallowed 

6 in accordance with section 502(g)(1). No claim for rejec7 tion damages shall be limited by section 502(b)(7). Eco8 nomic self-help by a labor organization shall be permitted 

9 upon a court order granting a motion to reject a collective 

10 bargaining agreement under subsection (d) or pursuant to 

11 subsection (e), and no provision of this title or of any other 

12 provision of Federal or State law may be construed to the 

13 contrary. 

14 ‘‘(g) The trustee shall provide for the reasonable fees 

15 and costs incurred by a labor organization under this sec16 tion, upon request and after notice and a hearing. 

17 ‘‘(h) A collective bargaining agreement that is as18 sumed shall be assumed in accordance with section 365.’’. 

19 SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED 

20 EMPLOYEES. 

21 Section 1114 of title 11, United States Code, is 

22 amended— 

23 (1) in subsection (a), by inserting ‘‘, without re24 gard to whether the debtor asserts a right to unilatVerDate Sep 11 2014 02:13 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H10538.IH H10538

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1 erally modify such payments under such plan, fund, 

2 or program’’ before the period at the end; 

3 (2) in subsection (b)(2), by inserting ‘‘, and a 

4 labor organization serving as the authorized rep5 resentative under subsection (c)(1),’’ after ‘‘section’’; 

6 (3) by striking subsection (f) and inserting the 

7 following: 

8 ‘‘(f)(1) If a trustee seeks modification of retiree bene9 fits, the trustee shall provide a notice to the authorized 

10 representative that modifications are being proposed pur11 suant to this section, and shall promptly provide an initial 

12 proposal. Thereafter, the trustee shall confer in good faith 

13 with the authorized representative at reasonable times and 

14 for a reasonable period in light of the complexity of the 

15 case in attempting to reach mutually satisfactory modi16 fications. 

17 ‘‘(2) The initial proposal and subsequent proposals 

18 by the trustee shall be based upon a business plan for the 

19 reorganization of the debtor and shall reflect the most 

20 complete and reliable information available. The trustee 

21 shall provide to the authorized representative all informa22 tion that is relevant for the negotiations. The court may 

23 enter a protective order to prevent the disclosure of infor24 mation if disclosure could compromise the position of the 

25 debtor with respect to the competitors in the industry of 


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1 the debtor, subject to the needs of the authorized rep2 resentative to evaluate the proposals of the trustee and 

3 an application pursuant to subsection (g) or (h). 

4 ‘‘(3) Modifications proposed by the trustee— 

5 ‘‘(A) shall be proposed only as part of a pro6 gram of workforce and nonworkforce cost savings 

7 devised for the reorganization of the debtor, includ8 ing savings in management personnel costs; 

9 ‘‘(B) shall be limited to modifications that are 

10 designed to achieve a specified aggregate financial 

11 contribution for the retiree group represented by the 

12 authorized representative (taking into consideration 

13 any cost savings implemented within the 12-month 

14 period before the date of filing of the petition with 

15 respect to the retiree group), and shall be no more 

16 than the minimum savings essential to permit the 

17 debtor to exit bankruptcy, such that confirmation of 

18 a plan of reorganization is not likely to be followed 

19 by the liquidation, or the need for further financial 

20 reorganization, of the debtor (or any successor to 

21 the debtor) in the short term; and 

22 ‘‘(C) shall not be disproportionate or overly bur23 den the retiree group, either in the amount of the 

24 cost savings sought from such group or the nature 

25 of the modifications.’’; 


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1 (4) in subsection (g)— 

2 (A) by striking the subsection designation 

3 and all that follows through the semicolon at 

4 the end of paragraph (3) and inserting the fol5 lowing: 

6 ‘‘(g)(1) If, after a period of negotiations, the trustee 

7 and the authorized representative have not reached agree8 ment over mutually satisfactory modifications and further 

9 negotiations are not likely to produce mutually satisfac10 tory modifications, the trustee may file a motion seeking 

11 modifications in the payment of retiree benefits after no12 tice and a hearing. Absent agreement of the parties, no 

13 such hearing shall be held before the expiration of the 21- 

14 day period beginning on the date on which notice of the 

15 hearing is provided to the authorized representative. Only 

16 the debtor and the authorized representative may appear 

17 and be heard at such hearing. 

18 ‘‘(2) The court may grant a motion to modify the 

19 payment of retiree benefits only if, based on clear and con20 vincing evidence— 

21 ‘‘(A) the court finds that the trustee has com22 plied with the requirements of subsection (f); 

23 ‘‘(B) the court has considered alternative pro24 posals by the authorized representative and has deVerDate Sep 11 2014 02:13 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H10538.IH H10538

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1 termined that such proposals do not meet the re2 quirements of subsection (f)(3)(B); 

3 ‘‘(C) the court finds that further negotiations 

4 regarding the proposal of the trustee or an alter5 native proposal by the authorized representative are 

6 not likely to produce a mutually satisfactory agree7 ment; 

8 ‘‘(D) the court finds that implementation of the 

9 proposal shall not cause irreparable harm to the af10 fected retirees; and 

11 ‘‘(E) the court concludes that an order granting 

12 the motion and immediate implementation of the 

13 proposal of the trustee is essential to permit the 

14 debtor to exit bankruptcy, such that confirmation of 

15 a plan of reorganization is not likely to be followed 

16 by liquidation, or the need for further financial reor17 ganization, of the debtor (or a successor to the debt18 or) in the short term. 

19 ‘‘(3) If, during the bankruptcy, a trustee has imple20 mented a program of incentive pay, bonuses, or other fi21 nancial returns for insiders of the debtor, senior executive 

22 officers of the debtor, the 20 highest compensated employ23 ees of the debtor who are not insiders or senior executive 

24 officers, any department or division managers of the debt25 or, or any consultants providing services to the debtor, or 


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1 such a program was implemented within 180 days before 

2 the date of the filing of the petition, the court shall pre3 sume that the trustee has failed to satisfy the require4 ments of subsection (f)(3)(C).’’; and 

5 (B) in the matter following paragraph 

6 (3)— 

7 (i) by striking ‘‘except that in no 

8 case’’ and inserting the following: 

9 ‘‘(4) In no case’’; and 

10 (ii) by striking ‘‘is consistent with the 

11 standard set forth in paragraph (3)’’ and 

12 inserting ‘‘assures that all creditors, the 

13 debtor, and all of the affected parties are 

14 treated fairly and equitably, and is clearly 

15 favored by the balance of the equities’’; 

16 (5) in subsection (h)(1), by inserting ‘‘for a pe17 riod of not longer than 14 days’’ before the period; 

18 and 

19 (6) by striking subsection (k) and redesignating 

20 subsections (l) and (m) as subsections (k) and (l), 

21 respectively. 

22 SEC. 203. PROTECTION OF EMPLOYEE BENEFITS IN A SALE 

23 OF ASSETS. 

24 (a) REQUIREMENT TO PRESERVE JOBS AND MAIN25 TAIN TERMS AND CONDITIONS OF EMPLOYMENT.—SecVerDate Sep 11 2014 02:13 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\H10538.IH H10538

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1 tion 363 of title 11, United States Code, is amended by 

2 adding at the end the following: 

3 ‘‘(q)(1) In approving a sale or lease of property of 

4 the estate under this section or a plan under chapter 11, 

5 the court shall give substantial weight to the extent to 

6 which a prospective purchaser or lessee of the property 

7 will— 

8 ‘‘(A) preserve the jobs of the employees of the 

9 debtor; 

10 ‘‘(B) maintain the terms and conditions of em11 ployment of the employees of the debtor; and 

12 ‘‘(C) assume or match the pension and health 

13 benefit obligations of the debtor to the retirees of 

14 the debtor. 

15 ‘‘(2) If there are two or more offers to purchase or 

16 lease property of the estate under this section or a plan 

17 under chapter 11, the court shall approve the offer of the 

18 prospective purchaser or lessee that will best carry out the 

19 actions described in subparagraphs (A) through (C) of 

20 paragraph (1).’’. 

21 (b) CHAPTER 11 PLANS.—Section 1129(a) of title 

22 11, United States Code is amended by adding at the end 

23 the following: 

24 ‘‘(17) If the plan provides for the sale of all or 

25 substantially all of the property of the estate, the 


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1 plan requires the purchaser of the sale to carry out 

2 the actions described in subparagraphs (A) through 

3 (C) of section 363(q)(1).’’. 

4 SEC. 204. CLAIM FOR PENSION LOSSES. 

5 Section 502 of title 11, United States Code, is 

6 amended by adding at the end the following: 

7 ‘‘(l) The court shall allow a claim asserted by an ac8 tive or retired participant, or by a labor organization rep9 resenting such participants, in a defined benefit plan ter10 minated under section 4041 or 4042 of the Employee Re11 tirement Income Security Act of 1974 (29 U.S.C. 1341, 

12 1342), for any shortfall in pension benefits accrued as of 

13 the effective date of the termination of such pension plan 

14 as a result of the termination of the plan and limitations 

15 upon the payment of benefits imposed pursuant to section 

16 4022 of that Act (29 U.S.C. 1322), notwithstanding any 

17 claim asserted and collected by the Pension Benefit Guar18 anty Corporation with respect to such termination. 

19 ‘‘(m) The court shall allow a claim of a kind described 

20 in section 101(5)(C) by an active or retired participant 

21 in a defined contribution plan (within the meaning of sec22 tion 3(34) of the Employee Retirement Income Security 

23 Act of 1974 (29 U.S.C. 1002(34))), or by a labor organi24 zation representing such participants. The amount of such 

25 claim shall be measured by the market value of the stock 


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1 at the time of contribution to, or purchase by, the plan 

2 and the value as of the commencement of the case.’’. 

3 SEC. 205. PAYMENTS BY SECURED LENDER. 

4 Section 506(c) of title 11, United States Code, is 

5 amended— 

6 (1) by adding ‘‘(1)’’ after ‘‘(c)’’; and 

7 (2) by adding at the end the following: 

8 ‘‘(2) If one or more employees of the debtor have not 

9 received wages, accrued vacation, severance, or any other 

10 compensation owed under a plan, program, policy or prac11 tice of the debtor, or pursuant to the terms of a collective 

12 bargaining agreement, for services rendered on or after 

13 the date of the commencement of the case, or the debtor 

14 has not made a contribution due under an employee ben15 efit plan on or after the date of the commencement of the 

16 case, such unpaid obligations shall be deemed reasonable, 

17 necessary costs and expenses of preserving, or disposing 

18 of, property securing an allowed secured claim and benefit19 ting the holder of the allowed secured claim, and shall be 

20 recovered by the trustee for payment to the employees or 

21 the employee benefit plan, as applicable, even if the trust22 ee, or a successor or predecessor in interest has otherwise 

23 waived the provisions of this subsection under an agree24 ment with the holder of the allowed secured claim or a 

25 successor or predecessor in interest.’’. 


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1 SEC. 206. PRESERVATION OF JOBS AND BENEFITS. 

2 Chapter 11 of title 11, United States Code, is amend3 ed— 

4 (1) by inserting before section 1101 the fol5 lowing: 

6 ‘‘§ 1100. Statement of purpose 

7 ‘‘A debtor commencing a case under this chapter 

8 shall have as its principal purpose the reorganization of 

9 its business to preserve going concern value to the max10 imum extent possible through the productive use of its as11 sets and the preservation of jobs that will sustain produc12 tive economic activity.’’; 

13 (2) in section 1129— 

14 (A) in subsection (a), as amended by sec15 tion 104 of this Act, by adding at the end the 

16 following: 

17 ‘‘(18) The debtor has demonstrated that the re18 organization preserves going concern value to the 

19 maximum extent possible through the productive use 

20 of the assets of the debtor and preserves jobs that 

21 sustain productive economic activity.’’; and 

22 (B) in subsection (c)— 

23 (i) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 

24 (ii) by striking the last sentence and 

25 inserting the following: 


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1 ‘‘(2) If the requirements of subsections (a) and (b) 

2 are met with respect to more than 1 plan, the court shall, 

3 in determining which plan to confirm— 

4 ‘‘(A) consider the extent to which each plan 

5 would preserve going concern value through the pro6 ductive use of the assets of the debtor and the pres7 ervation of jobs that sustain productive economic ac8 tivity; and 

9 ‘‘(B) confirm the plan that better serves such 

10 interests. 

11 ‘‘(3) A plan that incorporates the terms of a settle12 ment with a labor organization representing employees of 

13 the debtor shall presumptively constitute the plan that sat14 isfies this subsection.’’; and 

15 (3) in the table of sections, by inserting before 

16 the item relating to section 1101 the following: 

‘‘1100. Statement of purpose.’’. 

17 SEC. 207. TERMINATION OF EXCLUSIVITY. 

18 Section 1121(d) of title 11, United States Code, is 

19 amended by adding at the end the following: 

20 ‘‘(3) For purposes of this subsection, cause for reduc21 ing the 120-day period or the 180-day period includes— 

22 ‘‘(A) the filing of a motion pursuant to section 

23 1113 seeking rejection of a collective bargaining 

24 agreement if a plan based upon an alternative proVerDate Sep 11 2014 02:13 Jan 28, 2025 Jkt 059200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H10538.IH H10538

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1 posal by the labor organization is reasonably likely 

2 to be confirmed within a reasonable time; and 

3 ‘‘(B) the proposed filing of a plan by a pro4 ponent other than the debtor, which incorporates the 

5 terms of a settlement with a labor organization if 

6 such plan is reasonably likely to be confirmed within 

7 a reasonable time.’’. 

8 SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY. 

9 Section 503(b) of title 11, United States Code, as 

10 amended by section 103 of this Act, is amended by adding 

11 at the end the following: 

12 ‘‘(12) with respect to withdrawal liability owed 

13 to a multi-employer pension plan for a complete or 

14 partial withdrawal pursuant to section 4201 of the 

15 Employee Retirement Income Security Act of 1974 

16 (29 U.S.C. 1381) where such withdrawal occurs on 

17 or after the commencement of the case, an amount 

18 equal to the total benefits payable from such pension 

19 plan that accrued as a result of employees’ services 

20 rendered to the debtor during the period beginning 

21 on the date of commencement of the case and end22 ing on the date of the withdrawal from the plan.’’. 


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1 TITLE III—RESTRICTING EXECU2 TIVE COMPENSATION PRO3 GRAMS 

4 SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM 

5 BANKRUPTCY. 

6 Section 1129(a) of title 11, United States Code, as 

7 amended by sections 104 and 206 of this Act, is amend8 ed— 

9 (1) in paragraph (4)— 

10 (A) by adding ‘‘(A)’’ after ‘‘(4)’’; 

11 (B) in subparagraph (A), as so designated, 

12 by striking ‘‘Any payment’’ and inserting ‘‘Sub13 ject to subparagraph (B), any payment’’; and 

14 (C) by adding at the end the following: 

15 ‘‘(B)(i) Subject to clause (ii), the plan does not 

16 provide for payments or other distributions to, or for 

17 the benefit of, an insider of the debtor, a senior ex18 ecutive officer of the debtor, any of the 20 highest 

19 compensated employees of the debtor who are not in20 siders or senior executive officers, any department or 

21 division manager of the debtor, or any consultant 

22 providing services to the debtor, unless— 

23 ‘‘(I) the payments or other distributions 

24 are part of a program that is generally applica25 ble to all full-time employees of the debtor; and 


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1 ‘‘(II) the payments or distributions do not 

2 exceed the compensation limits established in 

3 section 503(c)(1) in comparison to the non4 management workforce of the debtor. 

5 ‘‘(ii) The requirement under clause (i) shall not 

6 apply to the compensation described in paragraph 

7 (5)(C).’’; 

8 (2) in paragraph (5)— 

9 (A) in subparagraph (A)(ii), by striking 

10 ‘‘and’’ at the end; 

11 (B) in subparagraph (B), by striking the 

12 period at the end and inserting ‘‘; and’’; and 

13 (C) by adding at the end the following: 

14 ‘‘(C) the compensation disclosed under subpara15 graph (B) has been approved by, or is subject to the 

16 approval of, the court as— 

17 ‘‘(i) reasonable when compared to individ18 uals holding comparable positions at com19 parable companies in the same industry as the 

20 debtor; 

21 ‘‘(ii) not more than the amount cor22 responding to the 50th percentile of the com23 pensation of the individuals described in clause 

24 (i); and 


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1 ‘‘(iii) not excessive or disproportionate in 

2 light of economic losses of the nonmanagement 

3 workforce of the debtor.’’. 

4 SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION EN5 HANCEMENTS. 

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

7 amended— 

8 (1) in the matter preceding paragraph (1), by 

9 inserting ‘‘and subject to section 363(b)(3)’’ after 

10 ‘‘subsection (b)’’; 

11 (2) in paragraph (1)— 

12 (A) in the matter preceding subparagraph 

13 (A)— 

14 (i) by inserting ‘‘, a senior executive 

15 officer of the debtor, any the 20 highest 

16 compensated employees of the debtor who 

17 are not insiders or senior executive officers, 

18 any department or division manager of the 

19 debtor, or any consultant providing serv20 ices to the debtor’’ before ‘‘for the pur21 pose’’; and 

22 (ii) by inserting ‘‘or for the payment 

23 of performance or incentive compensation, 

24 or a bonus of any kind, or other financial 

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1 centive, stock, or other compensation in ef2 fect before the date of the commencement 

3 of the case,’’ after ‘‘remain with the debt4 or’s business,’’; 

5 (B) by amending subparagraph (A) to read 

6 as follows: 

7 ‘‘(A) the transfer or obligation is part of a 

8 program that is generally applicable to all full9 time employees of the debtor; and’’; 

10 (C) by striking subparagraph (B); 

11 (D) by redesignating subparagraph (C) as 

12 subparagraph (B); 

13 (E) in subparagraph (B), as so redesig14 nated— 

15 (i) in clause (i), by striking ‘‘10’’ and 

16 inserting ‘‘2’’; and 

17 (ii) in clause (ii)— 

18 (I) by striking ‘‘25’’ and insert19 ing ‘‘10’’; and 

20 (II) by striking ‘‘insider’’ and in21 serting ‘‘person’’; 

22 (3) in paragraph (2)— 

23 (A) in the matter preceding subparagraph 

24 (A), by inserting ‘‘, a senior executive officer of 

25 the debtor, any of the 20 highest compensated 


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1 employees of the debtor who are not insiders or 

2 senior executive officers, any department or di3 vision manager of the debtor, or any consultant 

4 providing services to the debtor,’’ before ‘‘, un5 less’’; and 

6 (B) in subparagraph (B), by striking ‘‘10’’ 

7 and inserting ‘‘2’’; and 

8 (4) by amending paragraph (3) to read as fol9 lows: 

10 ‘‘(3) other transfers or obligations to, or for the 

11 benefit of, an insider of the debtor, a senior execu12 tive officer of the debtor, the 20 highest com13 pensated employees of the debtor who are not insid14 ers or senior executive officers, any department or 

15 division manager of the debtor, or any consultant 

16 providing services to the debtor that are outside of 

17 the ordinary course of business, except as part of a 

18 plan of reorganization and subject to the approval of 

19 the court under paragraphs (4) and (5) of section 

20 1129(a).’’. 

21 SEC. 303. PROHIBITION AGAINST SPECIAL COMPENSATION 

22 PAYMENTS. 

23 Section 363 of title 11, United States Code, as 

24 amended by section 203 of this Act, is amended— 


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1 (1) in subsection (b), by adding at the end the 

2 following: 

3 ‘‘(3) No plan, program, or other transfer or obliga4 tion to, or for the benefit of, an insider of the debtor, a 

5 senior executive officer of the debtor, the 20 highest com6 pensated employees of the debtor who are not insiders or 

7 senior executive officers, any department or division man8 ager of the debtor, or any consultant providing services 

9 to the debtor shall be approved if the debtor has, on or 

10 after the date that is 1 year before the date of the filing 

11 of the petition— 

12 ‘‘(A) discontinued any plan, program, policy, or 

13 practice of paying severance pay to the nonmanage14 ment workforce of the debtor; or 

15 ‘‘(B) modified any plan, program, policy, or 

16 practice described in subparagraph (A) in order to 

17 reduce benefits under the plan, program, policy, or 

18 practice.’’; and 

19 (2) in subsection (c)— 

20 (A) in paragraph (1), by striking ‘‘If the 

21 business’’ and inserting ‘‘Except as provided in 

22 paragraph (5), if the business’’; and 

23 (B) by adding at the end the following: 

24 ‘‘(5) In the case of a transaction that is a transfer 

25 or obligation described in paragraphs (1) through (3) of 


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1 section 503(c), the trustee shall obtain the prior approval 

2 of the court after notice and an opportunity for a hear3 ing.’’. 

4 SEC. 304. ASSUMPTION OF EXECUTIVE BENEFIT PLANS. 

5 Section 365 of title 11, United States Code, is 

6 amended— 

7 (1) in subsection (a), by striking ‘‘and (d)’’ and 

8 inserting ‘‘(d), (q), and (r)’’; and 

9 (2) by adding at the end the following: 

10 ‘‘(q) No deferred compensation arrangement for the 

11 benefit of an insider of the debtor, a senior executive offi12 cer of the debtor, or any of the 20 highest compensated 

13 employees of the debtor who are not insiders or senior ex14 ecutive officers shall be assumed if a defined benefit plan 

15 for employees of the debtor has been terminated pursuant 

16 to section 4041 or 4042 of the Employee Retirement In17 come Security Act of 1974 (29 U.S.C. 1341, 1342), on 

18 or after the date that is 1 year before the date of the com19 mencement of the case. 

20 ‘‘(r) No plan, fund, program, or contract to provide 

21 retiree benefits for insiders of the debtor, senior executive 

22 officers of the debtor, or the 20 highest compensated em23 ployees of the debtor who are not insiders or senior execu24 tive officers shall be assumed if the debtor has obtained 

25 relief under subsection (g) or (h) of section 1114 to impose 


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1 reductions in retiree benefits or under subsection (d) or 

2 (e) of section 1113 to impose reductions in the health ben3 efits of active employees of the debtor, or has otherwise 

4 reduced or eliminated health benefits for employees or re5 tirees of the debtor on are after the date that is 1 year 

6 before the date of the commencement of the case.’’. 

7 SEC. 305. RECOVERY OF EXECUTIVE COMPENSATION. 

8 (a) IN GENERAL.—Subchapter III of chapter 5 of 

9 title 11, United States Code, is amended by inserting after 

10 section 562 the following: 

11 ‘‘§ 563. Recovery of executive compensation 

12 ‘‘(a) If a debtor has obtained relief under section 

13 1113(d) or section 1114(g), by which the debtor reduces 

14 the cost of its obligations under a collective bargaining 

15 agreement or a plan, fund, or program for retiree benefits 

16 (as defined in section 1114(a)), the court, in granting re17 lief, shall determine the percentage diminution in the value 

18 of the obligations when compared to the obligations of the 

19 debtor under the collective bargaining agreement, or with 

20 respect to retiree benefits, as of the date of the commence21 ment of the case under this title before granting such re22 lief. In making its determination, the court shall include 

23 reductions in benefits, if any, as a result of the termi24 nation pursuant to section 4041 or 4042 of the Employee 

25 Retirement Income Security Act of 1974 (29 U.S.C. 1341, 


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1 1342), of a defined benefit plan administered by the debt2 or, or for which the debtor is a contributing employer, ef3 fective at any time on or after 180 days before the date 

4 of the commencement of a case under this title. The court 

5 shall not take into account pension benefits paid or pay6 able under that Act as a result of any such termination. 

7 ‘‘(b) If a defined benefit pension plan administered 

8 by the debtor, or for which the debtor is a contributing 

9 employer, has been terminated pursuant to section 4041 

10 or 4042 of the Employee Retirement Income Security Act 

11 of 1974 (29 U.S.C. 1341, 1342), effective at any time on 

12 or after 180 days before the date of the commencement 

13 of a case under this title, but a debtor has not obtained 

14 relief under section 1113(d), or section 1114(g), the court, 

15 upon motion of a party in interest, shall determine the 

16 percentage diminution in the value of benefit obligations 

17 when compared to the total benefit liabilities before such 

18 termination. The court shall not take into account pension 

19 benefits paid or payable under title IV of the Employee 

20 Retirement Income Security Act of 1974 (29 U.S.C. 1301 

21 et seq.) as a result of any such termination. 

22 ‘‘(c) Upon the determination of the percentage dimi23 nution in value under subsection (a) or (b), the estate shall 

24 have a claim for the return of the same percentage of the 

25 compensation paid, directly or indirectly (including any 


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1 transfer to a self-settled trust or similar device, or to a 

2 nonqualified deferred compensation plan under section 

3 409A(d)(1) of the Internal Revenue Code of 1986) to any 

4 officer of the debtor serving as member of the board of 

5 directors of the debtor within the year before the date of 

6 the commencement of the case, and any individual serving 

7 as chairman or lead director of the board of directors at 

8 the time of the granting of relief under section 1113 or 

9 1114 or, if no such relief has been granted, the termi10 nation of the defined benefit plan. 

11 ‘‘(d) The trustee or a committee appointed pursuant 

12 to section 1102 may commence an action to recover such 

13 claims, except that if neither the trustee nor such com14 mittee commences an action to recover such claim by the 

15 first date set for the hearing on the confirmation of plan 

16 under section 1129, any party in interest may apply to 

17 the court for authority to recover such claim for the ben18 efit of the estate. The costs of recovery shall be borne by 

19 the estate. 

20 ‘‘(e) The court shall not award postpetition com21 pensation under section 503(c) or otherwise to any person 

22 subject to subsection (c) of this section if there is a reason23 able likelihood that such compensation is intended to reim24 burse or replace compensation recovered by the estate 

25 under this section.’’. 


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1 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

2 The table of sections for chapter 5 of title 11, United 

3 States Code, is amended by inserting after the item relat4 ing to section 562 the following: 

‘‘563. Recovery of executive compensation.’’. 

5 SEC. 306. PREFERENTIAL COMPENSATION TRANSFER. 

6 Section 547 of title 11, United States Code, is 

7 amended by adding at the end the following: 

8 ‘‘(j)(1) The trustee may avoid a transfer— 

9 ‘‘(A) made— 

10 ‘‘(i) to, or for the benefit of, an insider of 

11 the debtor (including an obligation incurred for 

12 the benefit of an insider under an employment 

13 contract), a senior executive officer of the debt14 or, the 20 highest compensated employees of 

15 the debtor who are not insiders or senior execu16 tive officers, any department or division man17 ager of the debtor, or any consultant providing 

18 services to the debtor made in anticipation of 

19 bankruptcy; or 

20 ‘‘(ii) in anticipation of bankruptcy to a 

21 consultant who is formerly an insider and who 

22 is retained to provide services to an entity that 

23 becomes a debtor (including an obligation under 

24 a contract to provide services to such entity or 

25 to a debtor); and 


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1 ‘‘(B) made or incurred on or within 1 year be2 fore the filing of the petition. 

3 ‘‘(2) No provision of subsection (c) shall constitute 

4 a defense against the recovery of a transfer described in 

5 paragraph (1). 

6 ‘‘(3) The trustee or a committee appointed pursuant 

7 to section 1102 may commence an action to recover a 

8 transfer described in paragraph (1), except that, if neither 

9 the trustee nor such committee commences an action to 

10 recover the transfer by the time of the commencement of 

11 a hearing on the confirmation of a plan under section 

12 1129, any party in interest may apply to the court for 

13 authority to recover the claims for the benefit of the es14 tate. The costs of recovery shall be borne by the estate.’’. 

15 TITLE IV—OTHER PROVISIONS 

16 SEC. 401. UNION PROOF OF CLAIM. 

17 Section 501(a) of title 11, United States Code, is 

18 amended by inserting ‘‘, including a labor organization,’’ 

19 after ‘‘A creditor’’. 

20 SEC. 402. EXCEPTION FROM AUTOMATIC STAY. 

21 Section 362(b) of title 11, United States Code, is 

22 amended— 

23 (1) in paragraph (28), by striking ‘‘and’’ at the 

24 end; 


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1 (2) in paragraph (29), by striking the period at 

2 the end and inserting ‘‘; and’’; and 

3 (3) by inserting after paragraph (29) the fol4 lowing: 

5 ‘‘(30) of the commencement or continuation of 

6 a grievance, arbitration, or similar dispute resolution 

7 proceeding established by a collective bargaining 

8 agreement that was or could have been commenced 

9 against the debtor before the filing of a case under 

10 this title, or the payment or enforcement of an 

11 award or settlement under such proceeding.’’. 

12 SEC. 403. EFFECT ON COLLECTIVE BARGAINING AGREE13 MENTS UNDER THE RAILWAY LABOR ACT. 

14 Section 103 of title 11, United States Code, is 

15 amended by adding at the end the following: 

16 ‘‘(m) Notwithstanding sections 365, 1113, or 1114, 

17 neither the court nor the trustee may change the wages, 

18 working conditions, or retirement benefits of an employee 

19 or a retiree of the debtor established by a collective bar20 gaining agreement that is subject to the Railway Labor 

21 Act (45 U.S.C. 151 et seq.), except in accordance with 

22 section 6 of that Act (45 U.S.C. 156).’’. 

Æ 


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