II 

114TH CONGRESS 

1ST SESSION S. 1156 

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

and retirees in business bankruptcies. 

IN THE SENATE OF THE UNITED STATES 

APRIL 30, 2015 

Mr. DURBIN (for himself, Mr. WHITEHOUSE, Mr. BROWN, and Mr. FRANKEN) 

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 2015’’. 

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. 


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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 


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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 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,’’; 

24 (2) in paragraph (5)(A), by striking— 

25 (A) ‘‘within 180 days’’; and 


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1 (B) ‘‘or the date of the cessation of the 

2 debtor’s business, whichever occurs first’’; and 

3 (3) in paragraph (5), by striking subparagraph 

4 (B) and inserting the following: 

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

6 the number of employees covered by each such 

7 plan, multiplied by $20,000.’’. 

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

9 CONTRIBUTION PLANS. 

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

11 amended— 

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

13 the end; 

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

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

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

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

18 of the debtor, or an affiliate of the debtor, held 

19 in a defined contribution plan (within the mean20 ing of section 3(34) of the Employee Retire21 ment Income Security Act of 1974 (29 U.S.C. 

22 1002(34))) for the benefit of an individual who 

23 is not an insider, a senior executive officer, or 

24 any of the 20 next most highly compensated 

25 employees of the debtor (if 1 or more are not 


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1 insiders), if such securities were attributable to 

2 either employer contributions by the debtor or 

3 an affiliate of the debtor, or elective deferrals 

4 (within the meaning of section 402(g) of the In5 ternal Revenue Code of 1986), and any earn6 ings thereon, if an employer or plan sponsor 

7 who has commenced a case under this title has 

8 committed fraud with respect to such plan or 

9 has otherwise breached a duty to the partici10 pant that has proximately caused the loss of 

11 value.’’. 

12 SEC. 103. PRIORITY FOR SEVERANCE PAY. 

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

14 amended— 

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

16 the end; 

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

18 inserting a semicolon; and 

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

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

21 debtor (other than to an insider, other senior man22 agement, or a consultant retained to provide services 

23 to the debtor), under a plan, program, or policy gen24 erally applicable to employees of the debtor (but not 

25 under an individual contract of employment), or 


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1 owed pursuant to a collective bargaining agreement, 

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

3 filing of the petition, which pay shall be deemed 

4 earned in full upon such layoff or termination of em5 ployment; and’’. 

6 SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RE7 TIREES. 

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

9 amended— 

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

11 ‘‘(17) The plan provides for recovery of dam12 ages payable for the rejection of a collective bar13 gaining agreement, or for other financial returns as 

14 negotiated by the debtor and the authorized rep15 resentative under section 1113 (to the extent that 

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

17 a plan).’’; and 

18 (2) by striking paragraph (13) and inserting 

19 the following: 

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

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

22 ‘‘(A) provides for the continuation after its 

23 effective date of payment of all retiree benefits 

24 at the level established pursuant to subsection 

25 (e)(1)(B) or (g) of section 1114 at any time beVerDate Sep 11 2014 23:36 May 08, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1156.IS S1156

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1 fore the date of confirmation of the plan, for 

2 the duration of the period for which the debtor 

3 has obligated itself to provide such benefits, or 

4 if no modifications are made before confirma5 tion of the plan, the continuation of all such re6 tiree benefits maintained or established in whole 

7 or in part by the debtor before the date of the 

8 filing of the petition; and 

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

10 from the modification of retiree benefits or for 

11 other financial returns, as negotiated by the 

12 debtor and the authorized representative (to the 

13 extent that such returns are paid under, rather 

14 than outside of, a plan).’’. 

15 SEC. 105. PRIORITY FOR WARN ACT DAMAGES. 

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

17 Code is amended to read as follows: 

18 ‘‘(ii) wages and benefits awarded pursuant 

19 to a judicial proceeding or a proceeding of the 

20 National Labor Relations Board as back pay or 

21 damages attributable to any period of time oc22 curring after the date of commencement of the 

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

24 of Federal or State law by the debtor, without 

25 regard to the time of the occurrence of unlawful 


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1 conduct on which the award is based or to 

2 whether any services were rendered on or after 

3 the commencement of the case, including an 

4 award by a court under section 2901 of title 29, 

5 United States Code, of up to 60 days’ pay and 

6 benefits following a layoff that occurred or com7 menced at a time when such award period in8 cludes a period on or after the commencement 

9 of the case, if the court determines that pay10 ment of wages and benefits by reason of the op11 eration of this clause will not substantially in12 crease the probability of layoff or termination of 

13 current employees or of nonpayment of domes14 tic support obligations during the case under 

15 this title;’’. 

16 TITLE II—REDUCING EMPLOY17 EES’ AND RETIREES’ LOSSES 

18 SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREE19 MENTS. 

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

21 amended by striking subsections (a) through (f) and in22 serting the following: 

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

24 has been appointed under this chapter, other than a trust25 ee in a case covered by subchapter IV of this chapter and 


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1 by title I of the Railway Labor Act, may reject a collective 

2 bargaining agreement only in accordance with this section. 

3 In this section, a reference to the trustee includes the 

4 debtor in possession. 

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

6 permit the trustee to unilaterally terminate or alter any 

7 provision of a collective bargaining agreement before com8 plying with this section. The trustee shall timely pay all 

9 monetary obligations arising under the terms of the collec10 tive bargaining agreement. Any such payment required to 

11 be made before a plan confirmed under section 1129 is 

12 effective has the status of an allowed administrative ex13 pense under section 503. 

14 ‘‘(c)(1) If the trustee seeks modification of a collec15 tive bargaining agreement, the trustee shall provide notice 

16 to the labor organization representing the employees cov17 ered by the agreement that modifications are being pro18 posed under this section, and shall promptly provide an 

19 initial proposal for modifications to the agreement. There20 after, the trustee shall confer in good faith with the labor 

21 organization, at reasonable times and for a reasonable pe22 riod in light of the complexity of the case, in attempting 

23 to reach mutually acceptable modifications of such agree24 ment. 


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

2 by the trustee for modification of a collective bargaining 

3 agreement shall be based upon a business plan for the re4 organization of the debtor, and shall reflect the most com5 plete and reliable information available. The trustee shall 

6 provide to the labor organization all information that is 

7 relevant for negotiations. The court may enter a protective 

8 order to prevent the disclosure of information if disclosure 

9 could compromise the debtor’s position with respect to its 

10 competitors in the industry, subject to the needs of the 

11 labor organization to evaluate the trustee’s proposals and 

12 any application for rejection of the agreement or for in13 terim relief pursuant to this section. 

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

15 the practice and process of collective bargaining and in 

16 recognition of the bargained-for expectations of the em17 ployees covered by the agreement, modifications proposed 

18 by the trustee— 

19 ‘‘(A) shall be proposed only as part of a pro20 gram of workforce and nonworkforce cost savings 

21 devised for the reorganization of the debtor, includ22 ing savings in management personnel costs; 

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

24 to achieve a specified aggregate financial contribu25 tion for the employees covered by the agreement 


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1 (taking into consideration any labor cost savings ne2 gotiated within the 12-month period before the filing 

3 of the petition), and shall be not more than the min4 imum savings essential to permit the debtor to exit 

5 bankruptcy, such that confirmation of a plan of re6 organization is not likely to be followed by the liq7 uidation, or the need for further financial reorga8 nization, of the debtor (or any successor to the debt9 or) in the short term; and 

10 ‘‘(C) shall not be disproportionate or overly bur11 den the employees covered by the agreement, either 

12 in the amount of the cost savings sought from such 

13 employees or the nature of the modifications. 

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

15 and the labor organization have not reached an agreement 

16 over mutually satisfactory modifications, and further ne17 gotiations are not likely to produce mutually satisfactory 

18 modifications, the trustee may file a motion seeking rejec19 tion of the collective bargaining agreement after notice 

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

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

22 period beginning on the date on which notice of the hear23 ing is provided to the labor organization representing the 

24 employees covered by the agreement. Only the debtor and 

25 the labor organization may appear and be heard at such 


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1 hearing. An application for rejection shall seek rejection 

2 effective upon the entry of an order granting the relief. 

3 ‘‘(2) 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 agreement, the court may grant a 

7 motion seeking rejection of a collective bargaining agree8 ment only if, based on clear and convincing evidence— 

9 ‘‘(A) the court finds that the trustee has com10 plied with the requirements of subsection (c); 

11 ‘‘(B) the court has considered alternative pro12 posals by the labor organization and has concluded 

13 that such proposals do not meet the requirements of 

14 paragraph (3)(B) of subsection (c); 

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

16 regarding the trustee’s proposal or an alternative 

17 proposal by the labor organization are not likely to 

18 produce an agreement; 

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

20 trustee’s proposal shall not— 

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

22 purchasing power of the employees covered by 

23 the agreement; 


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

2 debtor to retain an experienced and qualified 

3 workforce; or 

4 ‘‘(iii) impair the debtor’s labor relations 

5 such that the ability to achieve a feasible reor6 ganization would be compromised; and 

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

8 agreement and immediate implementation of the 

9 trustee’s proposal is essential to permit the debtor to 

10 exit bankruptcy, such that confirmation of a plan of 

11 reorganization is not likely to be followed by liquida12 tion, or the need for further financial reorganization, 

13 of the debtor (or any successor to the debtor) in the 

14 short term. 

15 ‘‘(3) If the trustee has implemented a program of in16 centive pay, bonuses, or other financial returns for insid17 ers, senior executive officers, or the 20 next most highly 

18 compensated employees or consultants providing services 

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

20 was implemented within 180 days before the date of the 

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

22 trustee has failed to satisfy the requirements of subsection 

23 (c)(3)(C). 

24 ‘‘(4) In no case shall the court enter an order reject25 ing a collective bargaining agreement that would result in 


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1 modifications to a level lower than the level proposed by 

2 the trustee in the proposal found by the court to have com3 plied with the requirements of this section. 

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

5 rejecting a collective bargaining agreement is entered, or 

6 in the case of an agreement entered into between the 

7 trustee and the labor organization providing mutually sat8 isfactory modifications, at any time after such agreement 

9 has been entered into, the labor organization may apply 

10 to the court for an order seeking an increase in the level 

11 of wages or benefits, or relief from working conditions, 

12 based upon changed circumstances. The court shall grant 

13 the request only if the increase or other relief is not incon14 sistent with the standard set forth in paragraph (2)(E). 

15 ‘‘(e) During a period in which a collective bargaining 

16 agreement at issue under this section continues in effect, 

17 and if essential to the continuation of the debtor’s busi18 ness or in order to avoid irreparable damage to the estate, 

19 the court, after notice and a hearing, may authorize the 

20 trustee to implement interim changes in the terms, condi21 tions, wages, benefits, or work rules provided by the collec22 tive bargaining agreement. Any hearing under this sub23 section shall be scheduled in accordance with the needs 

24 of the trustee. The implementation of such interim 


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1 changes shall not render the application for rejection 

2 moot. 

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

4 constitutes a breach of the agreement, and shall be effec5 tive no earlier than the entry of an order granting such 

6 relief. 

7 ‘‘(2) Notwithstanding paragraph (1), solely for pur8 poses of determining and allowing a claim arising from 

9 the rejection of a collective bargaining agreement, rejec10 tion shall be treated as rejection of an executory contract 

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

12 in accordance with section 502(g)(1). No claim for rejec13 tion damages shall be limited by section 502(b)(7). Eco14 nomic self-help by a labor organization shall be permitted 

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

16 bargaining agreement under subsection (d) or pursuant to 

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

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

19 contrary. 

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

21 and costs incurred by a labor organization under this sec22 tion, upon request and after notice and a hearing. 

23 ‘‘(h) A collective bargaining agreement that is as24 sumed shall be assumed in accordance with section 365.’’. 


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1 SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED 

2 EMPLOYEES. 

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

4 amended— 

5 (1) in subsection (a), by inserting ‘‘, without re6 gard to whether the debtor asserts a right to unilat7 erally modify such payments under such plan, fund, 

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

9 (2) in subsection (b)(2), by inserting after ‘‘sec10 tion’’ the following: ‘‘, and a labor organization serv11 ing as the authorized representative under sub12 section (c)(1),’’; 

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

14 following: 

15 ‘‘(f)(1) If a trustee seeks modification of retiree bene16 fits, the trustee shall provide a notice to the authorized 

17 representative that modifications are being proposed pur18 suant to this section, and shall promptly provide an initial 

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

20 with the authorized representative at reasonable times and 

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

22 case in attempting to reach mutually satisfactory modi23 fications. 

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

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

26 reorganization of the debtor and shall reflect the most 


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1 complete and reliable information available. The trustee 

2 shall provide to the authorized representative all informa3 tion that is relevant for the negotiations. The court may 

4 enter a protective order to prevent the disclosure of infor5 mation if disclosure could compromise the debtor’s posi6 tion with respect to its competitors in the industry, subject 

7 to the needs of the authorized representative to evaluate 

8 the trustee’s proposals and an application pursuant to 

9 subsection (g) or (h). 

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

11 ‘‘(A) shall be proposed only as part of a pro12 gram of workforce and nonworkforce cost savings 

13 devised for the reorganization of the debtor, includ14 ing savings in management personnel costs; 

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

16 designed to achieve a specified aggregate financial 

17 contribution for the retiree group represented by the 

18 authorized representative (taking into consideration 

19 any cost savings implemented within the 12-month 

20 period before the date of filing of the petition with 

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

22 than the minimum savings essential to permit the 

23 debtor to exit bankruptcy, such that confirmation of 

24 a plan of reorganization is not likely to be followed 

25 by the liquidation, or the need for further financial 


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1 reorganization, of the debtor (or any successor to 

2 the debtor) in the short term; and 

3 ‘‘(C) shall not be disproportionate or overly bur4 den the retiree group, either in the amount of the 

5 cost savings sought from such group or the nature 

6 of the modifications.’’; 

7 (4) in subsection (g)— 

8 (A) by striking ‘‘(g)’’ and all that follows 

9 through the semicolon at the end of paragraph 

10 (3) and inserting the following: 

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

12 and the authorized representative have not reached agree13 ment over mutually satisfactory modifications and further 

14 negotiations are not likely to produce mutually satisfac15 tory modifications, the trustee may file a motion seeking 

16 modifications in the payment of retiree benefits after no17 tice and a hearing. Absent agreement of the parties, no 

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

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

20 hearing is provided to the authorized representative. Only 

21 the debtor and the authorized representative may appear 

22 and be heard at such hearing. 

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

24 payment of retiree benefits 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 (f); 

3 ‘‘(B) the court has considered alternative pro4 posals by the authorized representative and has de5 termined that such proposals do not meet the re6 quirements of subsection (f)(3)(B); 

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

8 regarding the trustee’s proposal or an alternative 

9 proposal by the authorized representative are not 

10 likely to produce a mutually satisfactory agreement; 

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

12 proposal shall not cause irreparable harm to the af13 fected retirees; and 

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

15 the motion and immediate implementation of the 

16 trustee’s proposal is essential to permit the debtor to 

17 exit bankruptcy, such that confirmation of a plan of 

18 reorganization is not likely to be followed by liquida19 tion, or the need for further financial reorganization, 

20 of the debtor (or a successor to the debtor) in the 

21 short term. 

22 ‘‘(3) If a trustee has implemented a program of in23 centive pay, bonuses, or other financial returns for insid24 ers, senior executive officers, or the 20 next most highly 

25 compensated employees or consultants providing services 


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1 to the debtor during the bankruptcy, or such a program 

2 was implemented within 180 days before the date of the 

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

4 trustee has failed to satisfy the requirements of subpara5 graph (f)(3)(C).’’; and 

6 (B) by striking ‘‘except that in no case’’ 

7 and inserting the following: 

8 ‘‘(4) In no case’’; and 

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

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

11 respectively. 

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

13 OF ASSETS. 

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

15 amended by adding at the end the following: 

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

17 court shall consider the extent to which a bidder has of18 fered to maintain existing jobs, preserve terms and condi19 tions of employment, and assume or match pension and 

20 retiree health benefit obligations in determining whether 

21 an offer constitutes the highest or best offer for such prop22 erty.’’. 

23 SEC. 204. CLAIM FOR PENSION LOSSES. 

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

25 amended by adding at the end the following: 


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1 ‘‘(l) The court shall allow a claim asserted by an ac2 tive or retired participant, or by a labor organization rep3 resenting such participants, in a defined benefit plan ter4 minated under section 4041 or 4042 of the Employee Re5 tirement Income Security Act of 1974, for any shortfall 

6 in pension benefits accrued as of the effective date of the 

7 termination of such pension plan as a result of the termi8 nation of the plan and limitations upon the payment of 

9 benefits imposed pursuant to section 4022 of such Act, 

10 notwithstanding any claim asserted and collected by the 

11 Pension Benefit Guaranty Corporation with respect to 

12 such termination. 

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

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

15 in a defined contribution plan (within the meaning of sec16 tion 3(34) of the Employee Retirement Income Security 

17 Act of 1974 (29 U.S.C. 1002(34))), or by a labor organi18 zation representing such participants. The amount of such 

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

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

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

22 SEC. 205. PAYMENTS BY SECURED LENDER. 

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

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

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


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1 other benefits owed under the policies and practices of the 

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

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

4 the commencement of the case, such unpaid obligations 

5 shall be deemed necessary costs and expenses of pre6 serving, or disposing of, property securing an allowed se7 cured claim and shall be recovered even if the trustee has 

8 otherwise waived the provisions of this subsection under 

9 an agreement with the holder of the allowed secured claim 

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

11 SEC. 206. PRESERVATION OF JOBS AND BENEFITS. 

12 Chapter 11 of title 11, United States Code, is amend13 ed— 

14 (1) by inserting before section 1101 the fol15 lowing: 

16 ‘‘§ 1100. Statement of purpose 

17 ‘‘A debtor commencing a case under this chapter 

18 shall have as its principal purpose the reorganization of 

19 its business to preserve going concern value to the max20 imum extent possible through the productive use of its as21 sets and the preservation of jobs that will sustain produc22 tive economic activity.’’; 

23 (2) in section 1129(a), as amended by section 

24 104, by adding at the end the following: 


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1 ‘‘(18) The debtor has demonstrated that the re2 organization preserves going concern value to the 

3 maximum extent possible through the productive use 

4 of the debtor’s assets and preserves jobs that sustain 

5 productive economic activity.’’; 

6 (3) in section 1129(c)— 

7 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 

8 (B) by striking the last sentence and in9 serting the following: 

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

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

12 in determining which plan to confirm— 

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

14 would preserve going concern value through the pro15 ductive use of the debtor’s assets and the preserva16 tion of jobs that sustain productive economic activ17 ity; and 

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

19 interests. 

20 ‘‘(3) A plan that incorporates the terms of a settle21 ment with a labor organization representing employees of 

22 the debtor shall presumptively constitute the plan that sat23 isfies this subsection.’’; and 

24 (4) in the table of sections, by inserting before 

25 the item relating to section 1101 the following: 

‘‘1100. Statement of purpose.’’. 


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1 SEC. 207. TERMINATION OF EXCLUSIVITY. 

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

3 amended by adding at the end the following: 

4 ‘‘(3) For purposes of this subsection, cause for reduc5 ing the 120-day period or the 180-day period includes the 

6 following: 

7 ‘‘(A) The filing of a motion pursuant to section 

8 1113 seeking rejection of a collective bargaining 

9 agreement if a plan based upon an alternative pro10 posal by the labor organization is reasonably likely 

11 to be confirmed within a reasonable time. 

12 ‘‘(B) The proposed filing of a plan by a pro13 ponent other than the debtor, which incorporates the 

14 terms of a settlement with a labor organization if 

15 such plan is reasonably likely to be confirmed within 

16 a reasonable time.’’. 

17 SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY. 

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

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

20 at the end the following: 

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

22 to a multiemployer pension plan for a complete or 

23 partial withdrawal pursuant to section 4201 of the 

24 Employee Retirement Income Security Act of 1974 

25 (29 U.S.C. 1381) where such withdrawal occurs on 

26 or after the commencement of the case, an amount 


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1 equal to the amount of vested benefits payable from 

2 such pension plan that accrued as a result of em3 ployees’ services rendered to the debtor during the 

4 period beginning on the date of commencement of 

5 the case and ending on the date of the withdrawal 

6 from the plan.’’. 

7 TITLE III—RESTRICTING EXECU8 TIVE COMPENSATION PRO9 GRAMS 

10 SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM 

11 BANKRUPTCY. 

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

13 amended— 

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

15 following: ‘‘Except for compensation subject to re16 view under paragraph (5), payments or other dis17 tributions under the plan to or for the benefit of in18 siders, senior executive officers, and any of the 20 

19 next most highly compensated employees or consult20 ants providing services to the debtor, shall not be 

21 approved except as part of a program of payments 

22 or distributions generally applicable to employees of 

23 the debtor, and only to the extent that the court de24 termines that such payments are not excessive or 


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1 disproportionate compared to distributions to the 

2 debtor’s nonmanagement workforce.’’; and 

3 (2) in paragraph (5)— 

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

5 ‘‘and’’ at the end; 

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

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

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

9 ‘‘(C) the compensation disclosed pursuant 

10 to subparagraph (B) has been approved by, or 

11 is subject to the approval of, the court as rea12 sonable when compared to individuals holding 

13 comparable positions at comparable companies 

14 in the same industry and not disproportionate 

15 in light of economic concessions by the debtor’s 

16 nonmanagement workforce during the case.’’. 

17 SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION EN18 HANCEMENTS. 

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

20 amended— 

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

22 subparagraph (A)— 

23 (A) by inserting ‘‘, a senior executive offi24 cer, or any of the 20 next most highly comVerDate Sep 11 2014 23:36 May 08, 2015 Jkt 049200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S1156.IS S1156

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1 pensated employees or consultants’’ after ‘‘an 

2 insider’’; 

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

4 performance or incentive compensation, or a 

5 bonus of any kind, or other financial returns 

6 designed to replace or enhance incentive, stock, 

7 or other compensation in effect before the date 

8 of the commencement of the case,’’ after ‘‘re9 main with the debtor’s business,’’; and 

10 (C) by inserting ‘‘clear and convincing’’ be11 fore ‘‘evidence in the record’’; and 

12 (2) by amending paragraph (3) to read as fol13 lows: 

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

15 benefit of insiders, senior executive officers, man16 agers, or consultants providing services to the debt17 or, in the absence of a finding by the court, based 

18 upon clear and convincing evidence, and without def19 erence to the debtor’s request for such payments, 

20 that such transfers or obligations are essential to the 

21 survival of the debtor’s business or (in the case of 

22 a liquidation of some or all of the debtor’s assets) 

23 essential to the orderly liquidation and maximization 

24 of value of the assets of the debtor, in either case, 

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1 vided, and then only to the extent that the court 

2 finds such transfers or obligations are reasonable 

3 compared to individuals holding comparable posi4 tions at comparable companies in the same industry 

5 and not disproportionate in light of economic conces6 sions by the debtor’s nonmanagement workforce dur7 ing the case.’’. 

8 SEC. 303. ASSUMPTION OF EXECUTIVE BENEFIT PLANS. 

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

10 amended— 

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

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

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

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

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

16 20 next most highly compensated employees of the debtor 

17 shall be assumed if a defined benefit plan for employees 

18 of the debtor has been terminated pursuant to section 

19 4041 or 4042 of the Employee Retirement Income Secu20 rity Act of 1974, on or after the date of the commence21 ment of the case or within 180 days before the date of 

22 the commencement of the case. 

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

24 retiree benefits for insiders, senior executive officers, or 

25 any of the 20 next most highly compensated employees 


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

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

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

4 (e) of section 1113 to impose reductions in the health ben5 efits of active employees of the debtor, or reduced or elimi6 nated health benefits for active or retired employees within 

7 180 days before the date of the commencement of the 

8 case.’’. 

9 SEC. 304. RECOVERY OF EXECUTIVE COMPENSATION. 

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

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

12 section 562 the following: 

13 ‘‘§ 563. Recovery of executive compensation 

14 ‘‘(a) If a debtor has obtained relief under subsection 

15 (d) of section 1113, or subsection (g) of section 1114, by 

16 which the debtor reduces the cost of its obligations under 

17 a collective bargaining agreement or a plan, fund, or pro18 gram for retiree benefits as defined in section 1114(a), 

19 the court, in granting relief, shall determine the percent20 age diminution in the value of the obligations when com21 pared to the debtor’s obligations under the collective bar22 gaining agreement, or with respect to retiree benefits, as 

23 of the date of the commencement of the case under this 

24 title before granting such relief. In making its determina25 tion, the court shall include reductions in benefits, if any, 


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1 as a result of the termination pursuant to section 4041 

2 or 4042 of the Employee Retirement Income Security Act 

3 of 1974, of a defined benefit plan administered by the 

4 debtor, or for which the debtor is a contributing employer, 

5 effective at any time on or after 180 days before the date 

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

7 shall not take into account pension benefits paid or pay8 able under such Act as a result of any such termination. 

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

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

11 employer, has been terminated pursuant to section 4041 

12 or 4042 of the Employee Retirement Income Security Act 

13 of 1974, effective at any time on or after 180 days before 

14 the date of the commencement of a case under this title, 

15 but a debtor has not obtained relief under subsection (d) 

16 of section 1113, or subsection (g) of section 1114, the 

17 court, upon motion of a party in interest, shall determine 

18 the percentage diminution in the value of benefit obliga19 tions when compared to the total benefit liabilities before 

20 such termination. The court shall not take into account 

21 pension benefits paid or payable under title IV of the Em22 ployee Retirement Income Security Act of 1974 as a result 

23 of any such termination. 

24 ‘‘(c) Upon the determination of the percentage dimi25 nution in value under subsection (a) or (b), the estate shall 


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

2 compensation paid, directly or indirectly (including any 

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

4 nonqualified deferred compensation plan under section 

5 409A(d)(1) of the Internal Revenue Code of 1986) to any 

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

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

8 the commencement of the case, and any individual serving 

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

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

11 1114 or, if no such relief has been granted, the termi12 nation of the defined benefit plan. 

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

14 to section 1102 may commence an action to recover such 

15 claims, except that if neither the trustee nor such com16 mittee commences an action to recover such claim by the 

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

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

19 the court for authority to recover such claim for the ben20 efit of the estate. The costs of recovery shall be borne by 

21 the estate. 

22 ‘‘(e) The court shall not award postpetition com23 pensation under section 503(c) or otherwise to any person 

24 subject to subsection (c) if there is a reasonable likelihood 

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1 place compensation recovered by the estate under this sec2 tion.’’. 

3 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

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

5 States Code, is amended by inserting after the item relat6 ing to section 562 the following: 

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

7 SEC. 305. PREFERENTIAL COMPENSATION TRANSFER. 

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

9 amended by adding at the end the following: 

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

11 ‘‘(A) made— 

12 ‘‘(i) to or for the benefit of an insider (in13 cluding an obligation incurred for the benefit of 

14 an insider under an employment contract) made 

15 in anticipation of bankruptcy; or 

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

17 consultant who is formerly an insider and who 

18 is retained to provide services to an entity that 

19 becomes a debtor (including an obligation under 

20 a contract to provide services to such entity or 

21 to a debtor); and 

22 ‘‘(B) made or incurred on or within 1 year be23 fore the filing of the petition. 


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

2 a defense against the recovery of a transfer described in 

3 paragraph (1). 

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

5 to section 1102 may commence an action to recover such 

6 transfer, except that, if neither the trustee nor such com7 mittee commences an action to recover such transfer by 

8 the time of the commencement of a hearing on the con9 firmation of a plan under section 1129, any party in inter10 est may apply to the court for authority to recover the 

11 claims for the benefit of the estate. The costs of recovery 

12 shall be borne by the estate.’’. 

13 TITLE IV—OTHER PROVISIONS 

14 SEC. 401. UNION PROOF OF CLAIM. 

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

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

17 after ‘‘A creditor’’. 

18 SEC. 402. EXCEPTION FROM AUTOMATIC STAY. 

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

20 amended— 

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

22 end; 

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

24 the end and inserting ‘‘; and’’; and 

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


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

2 a grievance, arbitration, or similar dispute resolution 

3 proceeding established by a collective bargaining 

4 agreement that was or could have been commenced 

5 against the debtor before the filing of a case under 

6 this title, or the payment or enforcement of an 

7 award or settlement under such proceeding.’’. 

Æ 


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