II 

115TH CONGRESS 

2D SESSION S. 2518 

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

and retirees in business bankruptcies. 

IN THE SENATE OF THE UNITED STATES 

MARCH 7, 2018 

Mr. DURBIN (for himself, Mr. WHITEHOUSE, and Mr. BROWN) introduced the 

following bill; which was read twice and 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 2018’’. 

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. 


SSpencer on DSKBBXCHB2PROD with BILLS
2 

•S 2518 IS

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. 

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. Assumption of executive benefit plans. 

Sec. 304. Recovery of executive compensation. 

Sec. 305. Preferential compensation transfer. 

TITLE IV—OTHER PROVISIONS 

Sec. 401. Union proof of claim. 

Sec. 402. Exception from automatic stay. 

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 


SSpencer on DSKBBXCHB2PROD with BILLS
3 

•S 2518 IS

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 striking ‘‘$10,000’’ and inserting 

19 ‘‘$20,000’’; 

20 (B) by striking ‘‘within 180 days’’; and 

21 (C) by striking ‘‘or the date of the ces22 sation of the debtor’s business, whichever oc23 curs first,’’; and 

24 (2) in paragraph (5)— 

25 (A) in subparagraph (A)— 


SSpencer on DSKBBXCHB2PROD with BILLS
4 

•S 2518 IS

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

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

3 cessation of the debtor’s business, which4 ever occurs first’’; and 

5 (B) by striking subparagraph (B) and in6 serting the following: 

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

8 the number of employees covered by each such 

9 plan, multiplied by $20,000.’’. 

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

11 CONTRIBUTION PLANS. 

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

13 amended— 

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

15 the end; 

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

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

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

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

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

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

22 defined contribution plan (within the 

23 meaning of section 3(34) of the Employee 

24 Retirement Income Security Act of 1974 

25 (29 U.S.C. 1002(34))) for the benefit of 


SSpencer on DSKBBXCHB2PROD with BILLS
5 

•S 2518 IS

1 an individual who is not an insider, a sen2 ior executive officer, or any of the twenty 

3 next most highly compensated employees of 

4 the debtor (if one or more are not insid5 ers); 

6 ‘‘(ii) the equity securities were attrib7 utable to either employer contributions by 

8 the debtor or an affiliate of the debtor, or 

9 elective deferrals (within the meaning of 

10 section 402(g) of the Internal Revenue 

11 Code of 1986), and any earnings thereon; 

12 and 

13 ‘‘(iii) an employer or plan sponsor 

14 who has commenced a case under this title 

15 has committed fraud with respect to such 

16 plan or has otherwise breached a duty to 

17 the participant that has proximately 

18 caused the loss of value.’’. 

19 SEC. 103. PRIORITY FOR SEVERANCE PAY. 

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

21 amended— 

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

23 the end; 

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

25 inserting a semicolon; and 


SSpencer on DSKBBXCHB2PROD with BILLS
6 

•S 2518 IS

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

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

3 debtor (other than to an insider, other senior man4 agement, or a consultant retained to provide services 

5 to the debtor), under a plan, program, or policy gen6 erally applicable to employees of the debtor (but not 

7 under an individual contract of employment), or 

8 owed pursuant to a collective bargaining agreement, 

9 for layoff or termination on or after the date of the 

10 filing of the petition, which pay shall be deemed 

11 earned in full upon such layoff or termination of em12 ployment; and’’. 

13 SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RE14 TIREES. 

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

16 amended— 

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

18 the following: 

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

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

21 ‘‘(A) provides for the continuation after 

22 the effective date of the plan of payment of all 

23 retiree benefits at the level established pursuant 

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

25 at any time before the date of confirmation of 


SSpencer on DSKBBXCHB2PROD with BILLS
7 

•S 2518 IS

1 the plan, for the duration of the period for 

2 which the debtor has obligated itself to provide 

3 such benefits, or if no modifications are made 

4 before confirmation of the plan, the continu5 ation of all such retiree benefits maintained or 

6 established in whole or in part by the debtor be7 fore the date of the filing of the petition; and 

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

9 from the modification of retiree benefits or for 

10 other financial returns, as negotiated by the 

11 debtor and the authorized representative (to the 

12 extent that such returns are paid under, rather 

13 than outside of, a plan).’’; and 

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

15 ‘‘(17) The plan provides for recovery of dam16 ages payable for the rejection of a collective bar17 gaining agreement, or for other financial returns as 

18 negotiated by the debtor and the authorized rep19 resentative under section 1113 (to the extent that 

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

21 a plan).’’. 

22 SEC. 105. PRIORITY FOR WARN ACT DAMAGES. 

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

24 Code is amended to read as follows: 


SSpencer on DSKBBXCHB2PROD with BILLS
8 

•S 2518 IS

1 ‘‘(ii) wages and benefits awarded pursuant 

2 to a judicial proceeding or a proceeding of the 

3 National Labor Relations Board as back pay or 

4 damages attributable to any period of time oc5 curring after the date of commencement of the 

6 case under this title, as a result of a violation 

7 of Federal or State law by the debtor, without 

8 regard to the time of the occurrence of unlawful 

9 conduct on which the award is based or to 

10 whether any services were rendered on or after 

11 the commencement of the case, including an 

12 award by a court under section 5 of the Worker 

13 Adjustment and Retraining Notification Act 

14 (29 U.S.C. 2104) of up to 60 days’ pay and 

15 benefits following a layoff that occurred or com16 menced at a time when such award period in17 cludes a period on or after the commencement 

18 of the case, if the court determines that pay19 ment of wages and benefits by reason of the op20 eration of this clause will not substantially in21 crease the probability of layoff or termination of 

22 current employees or of nonpayment of domes23 tic support obligations during the case under 

24 this title;’’. 


SSpencer on DSKBBXCHB2PROD with BILLS
9 

•S 2518 IS

1 TITLE II—REDUCING EMPLOY2 EES’ AND RETIREES’ LOSSES 

3 SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREE4 MENTS. 

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

6 amended by striking subsections (a) through (f) and in7 serting the following: 

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

9 has been appointed under this chapter, other than a trust10 ee in a case covered by subchapter IV of this chapter and 

11 by title I of the Railway Labor Act (45 U.S.C. 151 et 

12 seq.), may reject a collective bargaining agreement only 

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

14 to the trustee includes the debtor in possession. 

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

16 permit the trustee to unilaterally terminate or alter any 

17 provision of a collective bargaining agreement before com18 plying with this section. The trustee shall timely pay all 

19 monetary obligations arising under the terms of the collec20 tive bargaining agreement. Any such payment required to 

21 be made before a plan confirmed under section 1129 is 

22 effective has the status of an allowed administrative ex23 pense under section 503. 

24 ‘‘(c)(1) If the trustee seeks modification of a collec25 tive bargaining agreement, the trustee shall provide notice 


SSpencer on DSKBBXCHB2PROD with BILLS
10 

•S 2518 IS

1 to the labor organization representing the employees cov2 ered by the collective bargaining agreement that modifica3 tions are being proposed under this section, and shall 

4 promptly provide an initial proposal for modifications to 

5 the collective bargaining agreement. Thereafter, the trust6 ee shall confer in good faith with the labor organization, 

7 at reasonable times and for a reasonable period in light 

8 of the complexity of the case, in attempting to reach mutu9 ally acceptable modifications of the collective bargaining 

10 agreement. 

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

12 by the trustee for modification of a collective bargaining 

13 agreement shall be based upon a business plan for the re14 organization of the debtor, and shall reflect the most com15 plete and reliable information available. The trustee shall 

16 provide to the labor organization all information that is 

17 relevant for negotiations. The court may enter a protective 

18 order to prevent the disclosure of information if disclosure 

19 could compromise the position of the debtor with respect 

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

21 to the needs of the labor organization to evaluate the pro22 posals of the trustee and any application for rejection of 

23 the collective bargaining agreement or for interim relief 

24 pursuant to this section. 


SSpencer on DSKBBXCHB2PROD with BILLS
11 

•S 2518 IS

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

2 the practice and process of collective bargaining and in 

3 recognition of the bargained-for expectations of the em4 ployees covered by the collective bargaining agreement, 

5 modifications proposed by the trustee— 

6 ‘‘(A) shall be proposed only as part of a pro7 gram of workforce and nonworkforce cost savings 

8 devised for the reorganization of the debtor, includ9 ing savings in management personnel costs; 

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

11 to achieve a specified aggregate financial contribu12 tion for the employees covered by the collective bar13 gaining agreement (taking into consideration any 

14 labor cost savings negotiated within the 12-month 

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

16 not more than the minimum savings essential to per17 mit the debtor to exit bankruptcy, such that con18 firmation of a plan of reorganization is not likely to 

19 be followed by the liquidation, or the need for fur20 ther financial reorganization, of the debtor (or any 

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

22 ‘‘(C) shall not be disproportionate or overly bur23 den the employees covered by the collective bar24 gaining agreement, either in the amount of the cost 


SSpencer on DSKBBXCHB2PROD with BILLS
12 

•S 2518 IS

1 savings sought from such employees or the nature of 

2 the modifications. 

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

4 and the labor organization have not reached an agreement 

5 over mutually satisfactory modifications, and further ne6 gotiations are not likely to produce mutually satisfactory 

7 modifications, the trustee may file a motion seeking rejec8 tion of the collective bargaining agreement after notice 

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

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

11 period beginning on the date on which notice of the hear12 ing is provided to the labor organization representing the 

13 employees covered by the collective bargaining agreement. 

14 Only the debtor and the labor organization may appear 

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

16 shall seek rejection effective upon the entry of an order 

17 granting the relief. 

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

19 the practice and process of collective bargaining and in 

20 recognition of the bargained-for expectations of the em21 ployees covered by the collective bargaining agreement, the 

22 court may grant a motion seeking rejection of a collective 

23 bargaining agreement only if, based on clear and con24 vincing evidence— 


SSpencer on DSKBBXCHB2PROD with BILLS
13 

•S 2518 IS

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 


SSpencer on DSKBBXCHB2PROD with BILLS
14 

•S 2518 IS

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 the trustee has implemented a program of in6 centive pay, bonuses, or other financial returns for insid7 ers, senior executive officers, or the twenty next most 

8 highly compensated employees or consultants providing 

9 services to the debtor during the bankruptcy, or such a 

10 program was implemented within 180 days before the date 

11 of the filing of the petition, the court shall presume that 

12 the trustee has failed to satisfy the requirements of sub13 section (c)(3)(C). 

14 ‘‘(4) In no case shall the court enter an order reject15 ing a collective bargaining agreement that would result in 

16 modifications to a level lower than the level proposed by 

17 the trustee in the proposal found by the court to have com18 plied with the requirements of this section. 

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

20 rejecting a collective bargaining agreement is entered, or 

21 in the case of a collective bargaining agreement entered 

22 into between the trustee and the labor organization pro23 viding mutually satisfactory modifications, at any time 

24 after that collective bargaining agreement has been en25 tered into, the labor organization may apply to the court 


SSpencer on DSKBBXCHB2PROD with BILLS
15 

•S 2518 IS

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

2 benefits, or relief from working conditions, based upon 

3 changed circumstances. The court shall grant the request 

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

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

6 ‘‘(e) During a period during which a collective bar7 gaining agreement at issue under this section continues 

8 in effect, and if essential to the continuation of the busi9 ness of the debtor or in order to avoid irreparable damage 

10 to the estate, the court, after notice and a hearing, may 

11 authorize the trustee to implement interim changes in the 

12 terms, conditions, wages, benefits, or work rules provided 

13 by the collective bargaining agreement. Any hearing under 

14 this subsection shall be scheduled in accordance with the 

15 needs of the trustee. The implementation of such interim 

16 changes shall not render the application for rejection 

17 moot. 

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

19 constitutes a breach of the collective bargaining agree20 ment, and shall be effective no earlier than the entry of 

21 an order granting such relief. 

22 ‘‘(2) Notwithstanding paragraph (1), solely for pur23 poses of determining and allowing a claim arising from 

24 the rejection of a collective bargaining agreement, rejec25 tion shall be treated as rejection of an executory contract 


SSpencer on DSKBBXCHB2PROD with BILLS
16 

•S 2518 IS

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

2 in accordance with section 502(g)(1). No claim for rejec3 tion damages shall be limited by section 502(b)(7). Eco4 nomic self-help by a labor organization shall be permitted 

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

6 bargaining agreement under subsection (d) or pursuant to 

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

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

9 contrary. 

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

11 and costs incurred by a labor organization under this sec12 tion, upon request and after notice and a hearing. 

13 ‘‘(h) A collective bargaining agreement that is as14 sumed shall be assumed in accordance with section 365.’’. 

15 SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED 

16 EMPLOYEES. 

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

18 amended— 

19 (1) in subsection (a), by inserting ‘‘, without re20 gard to whether the debtor asserts a right to unilat21 erally modify such payments under such plan, fund, 

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

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

24 labor organization serving as the authorized rep25 resentative under subsection (c)(1),’’ after ‘‘section’’; 


SSpencer on DSKBBXCHB2PROD with BILLS
17 

•S 2518 IS

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

2 following: 

3 ‘‘(f)(1) If a trustee seeks modification of retiree bene4 fits, the trustee shall provide a notice to the authorized 

5 representative that modifications are being proposed pur6 suant to this section, and shall promptly provide an initial 

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

8 with the authorized representative at reasonable times and 

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

10 case in attempting to reach mutually satisfactory modi11 fications. 

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

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

14 reorganization of the debtor and shall reflect the most 

15 complete and reliable information available. The trustee 

16 shall provide to the authorized representative all informa17 tion that is relevant for the negotiations. The court may 

18 enter a protective order to prevent the disclosure of infor19 mation if disclosure could compromise the position of the 

20 debtor with respect to the competitors in the industry of 

21 the debtor, subject to the needs of the authorized rep22 resentative to evaluate the proposals of the trustee and 

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

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


SSpencer on DSKBBXCHB2PROD with BILLS
18 

•S 2518 IS

1 ‘‘(A) shall be proposed only as part of a pro2 gram of workforce and nonworkforce cost savings 

3 devised for the reorganization of the debtor, includ4 ing savings in management personnel costs; 

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

6 designed to achieve a specified aggregate financial 

7 contribution for the retiree group represented by the 

8 authorized representative (taking into consideration 

9 any cost savings implemented within the 12-month 

10 period before the date of filing of the petition with 

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

12 than the minimum savings essential to permit the 

13 debtor to exit bankruptcy, such that confirmation of 

14 a plan of reorganization is not likely to be followed 

15 by the liquidation, or the need for further financial 

16 reorganization, of the debtor (or any successor to 

17 the debtor) in the short term; and 

18 ‘‘(C) shall not be disproportionate or overly bur19 den the retiree group, either in the amount of the 

20 cost savings sought from such group or the nature 

21 of the modifications.’’; 

22 (4) in subsection (g)— 

23 (A) by striking the subsection designation 

24 and all that follows through the semicolon at 


SSpencer on DSKBBXCHB2PROD with BILLS
19 

•S 2518 IS

1 the end of paragraph (3) and inserting the fol2 lowing: 

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

4 and the authorized representative have not reached agree5 ment over mutually satisfactory modifications and further 

6 negotiations are not likely to produce mutually satisfac7 tory modifications, the trustee may file a motion seeking 

8 modifications in the payment of retiree benefits after no9 tice and a hearing. Absent agreement of the parties, no 

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

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

12 hearing is provided to the authorized representative. Only 

13 the debtor and the authorized representative may appear 

14 and be heard at such hearing. 

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

16 payment of retiree benefits only if, based on clear and con17 vincing evidence— 

18 ‘‘(A) the court finds that the trustee has com19 plied with the requirements of subsection (f); 

20 ‘‘(B) the court has considered alternative pro21 posals by the authorized representative and has de22 termined that such proposals do not meet the re23 quirements of subsection (f)(3)(B); 

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

25 regarding the proposal of the trustee or an alterVerDate Sep 11 2014 04:10 Mar 15, 2018 Jkt 079200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\S2518.IS S2518

SSpencer on DSKBBXCHB2PROD with BILLS
20 

•S 2518 IS

1 native proposal by the authorized representative are 

2 not likely to produce a mutually satisfactory agree3 ment; 

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

5 proposal shall not cause irreparable harm to the af6 fected retirees; and 

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

8 the motion and immediate implementation of the 

9 proposal of the trustee is essential to permit the 

10 debtor to exit bankruptcy, such that confirmation of 

11 a plan of reorganization is not likely to be followed 

12 by liquidation, or the need for further financial reor13 ganization, of the debtor (or a successor to the debt14 or) in the short term. 

15 ‘‘(3) If a trustee has implemented a program of in16 centive pay, bonuses, or other financial returns for insid17 ers, senior executive officers, or the twenty next most 

18 highly compensated employees or consultants providing 

19 services to the debtor during the bankruptcy, or such a 

20 program was implemented within 180 days before the date 

21 of the filing of the petition, the court shall presume that 

22 the trustee has failed to satisfy the requirements of sub23 paragraph (f)(3)(C).’’; and 

24 (B) in the matter following paragraph 

25 (3)— 


SSpencer on DSKBBXCHB2PROD with BILLS
21 

•S 2518 IS

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

2 case’’ and inserting the following: 

3 ‘‘(4) In no case’’; and 

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

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

6 inserting ‘‘assures that all creditors, the 

7 debtor, and all of the affected parties are 

8 treated fairly and equitably, and is clearly 

9 favored by the balance of the equities’’; 

10 and 

11 (5) by striking subsection (k) and redesignating 

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

13 respectively. 

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

15 OF ASSETS. 

16 Section 363(b) of title 11, United States Code, is 

17 amended by adding at the end the following: 

18 ‘‘(3) In approving a sale under this subsection, the 

19 court shall consider the extent to which a bidder has of20 fered to maintain existing jobs, preserve terms and condi21 tions of employment, and assume or match pension and 

22 retiree health benefit obligations in determining whether 

23 an offer constitutes the highest or best offer for such prop24 erty.’’. 


SSpencer on DSKBBXCHB2PROD with BILLS
22 

•S 2518 IS

1 SEC. 204. CLAIM FOR PENSION LOSSES. 

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

3 amended by adding at the end the following: 

4 ‘‘(l) The court shall allow a claim asserted by an ac5 tive or retired participant, or by a labor organization rep6 resenting such participants, in a defined benefit plan ter7 minated under section 4041 or 4042 of the Employee Re8 tirement Income Security Act of 1974 (29 U.S.C. 1341, 

9 1342), for any shortfall in pension benefits accrued as of 

10 the effective date of the termination of such pension plan 

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

12 upon the payment of benefits imposed pursuant to section 

13 4022 of that Act (29 U.S.C. 1342), notwithstanding any 

14 claim asserted and collected by the Pension Benefit Guar15 anty Corporation with respect to such termination. 

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

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

18 in a defined contribution plan (within the meaning of sec19 tion 3(34) of the Employee Retirement Income Security 

20 Act of 1974 (29 U.S.C. 1002(34))), or by a labor organi21 zation representing such participants. The amount of such 

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

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

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


SSpencer on DSKBBXCHB2PROD with BILLS
23 

•S 2518 IS

1 SEC. 205. PAYMENTS BY SECURED LENDER. 

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

3 amended by adding at the end the following: ‘‘If employees 

4 have not received wages, accrued vacation, severance, or 

5 other benefits owed under the policies and practices of the 

6 debtor, or pursuant to the terms of a collective bargaining 

7 agreement, for services rendered on and after the date of 

8 the commencement of the case, such unpaid obligations 

9 shall be deemed necessary costs and expenses of pre10 serving, or disposing of, property securing an allowed se11 cured claim and shall be recovered even if the trustee has 

12 otherwise waived the provisions of this subsection under 

13 an agreement with the holder of the allowed secured claim 

14 or a successor or predecessor in interest.’’. 

15 SEC. 206. PRESERVATION OF JOBS AND BENEFITS. 

16 Chapter 11 of title 11, United States Code, is amend17 ed— 

18 (1) by inserting before section 1101 the fol19 lowing: 

20 ‘‘§ 1100. Statement of purpose 

21 ‘‘A debtor commencing a case under this chapter 

22 shall have as its principal purpose the reorganization of 

23 its business to preserve going concern value to the max24 imum extent possible through the productive use of its as25 sets and the preservation of jobs that will sustain produc26 tive economic activity.’’; 


SSpencer on DSKBBXCHB2PROD with BILLS
24 

•S 2518 IS

1 (2) in section 1129— 

2 (A) in subsection (a), as amended by sec3 tion 104, by adding at the end the following: 

4 ‘‘(18) The debtor has demonstrated that the re5 organization preserves going concern value to the 

6 maximum extent possible through the productive use 

7 of the assets of the debtor and preserves jobs that 

8 sustain productive economic activity.’’; and 

9 (B) in subsection (c)— 

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

11 (ii) by striking the last sentence and 

12 inserting the following: 

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

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

15 in determining which plan to confirm— 

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

17 would preserve going concern value through the pro18 ductive use of the assets of the debtor and the pres19 ervation of jobs that sustain productive economic ac20 tivity; and 

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

22 interests. 

23 ‘‘(3) A plan that incorporates the terms of a settle24 ment with a labor organization representing employees of 


SSpencer on DSKBBXCHB2PROD with BILLS
25 

•S 2518 IS

1 the debtor shall presumptively constitute the plan that sat2 isfies this subsection.’’; and 

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

4 the item relating to section 1101 the following: 

‘‘1100. Statement of purpose.’’. 

5 SEC. 207. TERMINATION OF EXCLUSIVITY. 

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

7 amended by adding at the end the following: 

8 ‘‘(3) For purposes of this subsection, cause for reduc9 ing the 120-day period or the 180-day period includes— 

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

11 1113 seeking rejection of a collective bargaining 

12 agreement if a plan based upon an alternative pro13 posal by the labor organization is reasonably likely 

14 to be confirmed within a reasonable time; and 

15 ‘‘(B) the proposed filing of a plan by a pro16 ponent other than the debtor, which incorporates the 

17 terms of a settlement with a labor organization if 

18 such plan is reasonably likely to be confirmed within 

19 a reasonable time.’’. 

20 SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY. 

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

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

23 at the end the following: 

24 ‘‘(11) with respect to withdrawal liability owed 

25 to a multiemployer pension plan for a complete or 


SSpencer on DSKBBXCHB2PROD with BILLS
26 

•S 2518 IS

1 partial withdrawal pursuant to section 4201 of the 

2 Employee Retirement Income Security Act of 1974 

3 (29 U.S.C. 1381) where such withdrawal occurs on 

4 or after the commencement of the case, an amount 

5 equal to the amount of vested benefits payable from 

6 such pension plan that accrued as a result of em7 ployees’ services rendered to the debtor during the 

8 period beginning on the date of commencement of 

9 the case and ending on the date of the withdrawal 

10 from the plan.’’. 

11 TITLE III—RESTRICTING EXECU12 TIVE COMPENSATION PRO13 GRAMS 

14 SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM 

15 BANKRUPTCY. 

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

17 amended— 

18 (1) in paragraph (4), by adding at the end the 

19 following: ‘‘Except for compensation subject to re20 view under paragraph (5), payments or other dis21 tributions under the plan to or for the benefit of in22 siders, senior executive officers, and any of the twen23 ty next most highly compensated employees or con24 sultants providing services to the debtor, shall not be 

25 approved except as part of a program of payments 


SSpencer on DSKBBXCHB2PROD with BILLS
27 

•S 2518 IS

1 or distributions generally applicable to employees of 

2 the debtor, and only to the extent that the court de3 termines that such payments are not excessive or 

4 disproportionate compared to distributions to the 

5 nonmanagement workforce of the debtor.’’; and 

6 (2) in paragraph (5)— 

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

8 ‘‘and’’ at the end; 

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

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

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

12 ‘‘(C) the compensation disclosed pursuant to 

13 subparagraph (B) has been approved by, or is sub14 ject to the approval of, the court as— 

15 ‘‘(i) reasonable when compared to individ16 uals holding comparable positions at com17 parable companies in the same industry; and 

18 ‘‘(ii) not disproportionate in light of eco19 nomic concessions by the nonmanagement work20 force of the debtor during the case.’’. 

21 SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION EN22 HANCEMENTS. 

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

24 amended— 


SSpencer on DSKBBXCHB2PROD with BILLS
28 

•S 2518 IS

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

2 subparagraph (A)— 

3 (A) by inserting ‘‘, a senior executive offi4 cer, or any of the twenty next most highly com5 pensated employees or consultants’’ after ‘‘an 

6 insider’’; 

7 (B) by inserting ‘‘or for the payment of 

8 performance or incentive compensation, or a 

9 bonus of any kind, or other financial returns 

10 designed to replace or enhance incentive, stock, 

11 or other compensation in effect before the date 

12 of the commencement of the case,’’ after ‘‘re13 main with the debtor’s business,’’; and 

14 (C) by inserting ‘‘clear and convincing’’ be15 fore ‘‘evidence in the record’’; and 

16 (2) by amending paragraph (3) to read as fol17 lows: 

18 ‘‘(3) other transfers or obligations to or for the 

19 benefit of insiders, senior executive officers, man20 agers, or consultants providing services to the debt21 or, in the absence of a finding by the court, based 

22 upon clear and convincing evidence, and without def23 erence to the request of the debtor for such pay24 ments, that such transfers or obligations are essen25 tial to the survival of the business of the debtor or 


SSpencer on DSKBBXCHB2PROD with BILLS
29 

•S 2518 IS

1 (in the case of a liquidation of some or all of the as2 sets of the debtor) essential to the orderly liquida3 tion and maximization of value of the assets of the 

4 debtor, in either case, because of the essential na5 ture of the services provided, and then only to the 

6 extent that the court finds such transfers or obliga7 tions are reasonable compared to individuals holding 

8 comparable positions at comparable companies in 

9 the same industry and not disproportionate in light 

10 of economic concessions by the nonmanagement 

11 workforce of the debtor during the case.’’. 

12 SEC. 303. ASSUMPTION OF EXECUTIVE BENEFIT PLANS. 

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

14 amended— 

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

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

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

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

19 benefit of insiders, senior executive officers, or any of the 

20 twenty next most highly compensated employees of the 

21 debtor shall be assumed if a defined benefit plan for em22 ployees of the debtor has been terminated pursuant to sec23 tion 4041 or 4042 of the Employee Retirement Income 

24 Security Act of 1974 (29 U.S.C. 1341, 1342), on or after 


SSpencer on DSKBBXCHB2PROD with BILLS
30 

•S 2518 IS

1 the date of the commencement of the case or within 180 

2 days before the date of the commencement of the case. 

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

4 retiree benefits for insiders, senior executive officers, or 

5 any of the twenty next most highly compensated employees 

6 of the debtor shall be assumed if the debtor has obtained 

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

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

9 (e) of section 1113 to impose reductions in the health ben10 efits of active employees of the debtor, or reduced or elimi11 nated health benefits for active or retired employees within 

12 180 days before the date of the commencement of the 

13 case.’’. 

14 SEC. 304. RECOVERY OF EXECUTIVE COMPENSATION. 

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

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

17 section 562 the following: 

18 ‘‘§ 563. Recovery of executive compensation 

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

20 1113(d) or section 1114(g), by which the debtor reduces 

21 the cost of its obligations under a collective bargaining 

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

23 (as defined in section 1114(a)), the court, in granting re24 lief, shall determine the percentage diminution in the value 

25 of the obligations when compared to the obligations of the 


SSpencer on DSKBBXCHB2PROD with BILLS
31 

•S 2518 IS

1 debtor under the collective bargaining agreement, or with 

2 respect to retiree benefits, as of the date of the commence3 ment of the case under this title before granting such re4 lief. In making its determination, the court shall include 

5 reductions in benefits, if any, as a result of the termi6 nation pursuant to section 4041 or 4042 of the Employee 

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

8 1342), of a defined benefit plan administered by the debt9 or, or for which the debtor is a contributing employer, ef10 fective at any time on or after 180 days before the date 

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

12 shall not take into account pension benefits paid or pay13 able under that Act as a result of any such termination. 

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

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

16 employer, has been terminated pursuant to section 4041 

17 or 4042 of the Employee Retirement Income Security Act 

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

19 or after 180 days before the date of the commencement 

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

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

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

23 percentage diminution in the value of benefit obligations 

24 when compared to the total benefit liabilities before such 

25 termination. The court shall not take into account pension 


SSpencer on DSKBBXCHB2PROD with BILLS
32 

•S 2518 IS

1 benefits paid or payable under title IV of the Employee 

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

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

4 ‘‘(c) Upon the determination of the percentage dimi5 nution in value under subsection (a) or (b), the estate shall 

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

7 compensation paid, directly or indirectly (including any 

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

9 nonqualified deferred compensation plan under section 

10 409A(d)(1) of the Internal Revenue Code of 1986) to any 

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

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

13 the commencement of the case, and any individual serving 

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

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

16 1114 or, if no such relief has been granted, the termi17 nation of the defined benefit plan. 

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

19 to section 1102 may commence an action to recover such 

20 claims, except that if neither the trustee nor such com21 mittee commences an action to recover such claim by the 

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

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

24 the court for authority to recover such claim for the benVerDate Sep 11 2014 04:10 Mar 15, 2018 Jkt 079200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 E:\BILLS\S2518.IS S2518

SSpencer on DSKBBXCHB2PROD with BILLS
33 

•S 2518 IS

1 efit of the estate. The costs of recovery shall be borne by 

2 the estate. 

3 ‘‘(e) The court shall not award postpetition com4 pensation under section 503(c) or otherwise to any person 

5 subject to subsection (c) of this section if there is a reason6 able likelihood that such compensation is intended to reim7 burse or replace compensation recovered by the estate 

8 under this section.’’. 

9 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

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

11 States Code, is amended by inserting after the item relat12 ing to section 562 the following: 

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

13 SEC. 305. PREFERENTIAL COMPENSATION TRANSFER. 

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

15 amended by adding at the end the following: 

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

17 ‘‘(A) made— 

18 ‘‘(i) to or for the benefit of an insider (in19 cluding an obligation incurred for the benefit of 

20 an insider under an employment contract) made 

21 in anticipation of bankruptcy; or 

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

23 consultant who is formerly an insider and who 

24 is retained to provide services to an entity that 

25 becomes a debtor (including an obligation under 


SSpencer on DSKBBXCHB2PROD with BILLS
34 

•S 2518 IS

1 a contract to provide services to such entity or 

2 to a debtor); and 

3 ‘‘(B) made or incurred on or within 1 year be4 fore the filing of the petition. 

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

6 a defense against the recovery of a transfer described in 

7 paragraph (1). 

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

9 to section 1102 may commence an action to recover a 

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

11 the trustee nor such committee commences an action to 

12 recover the transfer by the time of the commencement of 

13 a hearing on the confirmation of a plan under section 

14 1129, any party in interest may apply to the court for 

15 authority to recover the claims for the benefit of the es16 tate. The costs of recovery shall be borne by the estate.’’. 

17 TITLE IV—OTHER PROVISIONS 

18 SEC. 401. UNION PROOF OF CLAIM. 

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

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

21 after ‘‘A creditor’’. 

22 SEC. 402. EXCEPTION FROM AUTOMATIC STAY. 

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

24 amended— 


SSpencer on DSKBBXCHB2PROD with BILLS
35 

•S 2518 IS

1 (1) in paragraph (27), by striking ‘‘and’’ at the 

2 end; 

3 (2) in paragraph (28), by striking the period at 

4 the end and inserting ‘‘; and’’; and 

5 (3) by inserting after paragraph (28) the fol6 lowing: 

7 ‘‘(29) of the commencement or continuation of 

8 a grievance, arbitration, or similar dispute resolution 

9 proceeding established by a collective bargaining 

10 agreement that was or could have been commenced 

11 against the debtor before the filing of a case under 

12 this title, or the payment or enforcement of an 

13 award or settlement under such proceeding.’’. 

Æ 


SSpencer on DSKBBXCHB2PROD with BILLS