II 

113TH CONGRESS 

2D SESSION S. 2418 

To amend title 11 and title 29, United States Code, to increase the amount 

of unsecured claims for salaries and wages given priority in bankruptcy, 

to provide for payments to retirees to compensate for lost health insurance benefits resulting from the bankruptcy of their former employer, 

to protect the health benefits of employees and retirees, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 3, 2014 

Mr. ROCKEFELLER (for himself and Ms. WARREN) introduced the following 

bill; which was read twice and referred to the Committee on the Judiciary 

A BILL 

To amend title 11 and title 29, United States Code, to 

increase the amount of unsecured claims for salaries 

and wages given priority in bankruptcy, to provide for 

payments to retirees to compensate for lost health insurance benefits resulting from the bankruptcy of their 

former employer, to protect the health benefits of employees and retirees, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE. 

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

3 ‘‘Bankruptcy Fairness and Employee Benefits Protection 

4 Act of 2014’’. 

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

6 this Act is as follows: 

Sec. 1. Short title. 

TITLE I—FAIRNESS FOR EMPLOYEES AND RETIREES IN 

CORPORATE BANKRUPTCIES 

Sec. 101. Prohibition of unfair reductions to employee and retiree benefits. 

Sec. 102. Payment of insurance benefits to retirees. 

Sec. 103. Fair treatment of compensation. 

Sec. 104. Venue; change of venue. 

Sec. 105. Protection of benefits in chapter 9 bankruptcy. 

Sec. 106. Requirement to make pension contributions. 

TITLE II—PROTECTION OF EMPLOYEE AND RETIREE HEALTH 

BENEFITS 

Sec. 201. Notification of extent to which health benefits can be modified or terminated. 

Sec. 202. Protection of retirees under certain collectively bargained agreements. 

Sec. 203. Comptroller General report. 

7 TITLE I—FAIRNESS FOR EM8 PLOYEES AND RETIREES IN 

9 CORPORATE BANKRUPTCIES 

10 SEC. 101. PROHIBITION OF UNFAIR REDUCTIONS TO EM11 PLOYEE AND RETIREE BENEFITS. 

12 (a) COLLECTIVE BARGAINING AGREEMENTS.—Sec13 tion 1113 of title 11, United States Code, is amended— 

14 (1) in subsection (b)— 

15 (A) in paragraph (1)(A), by striking ‘‘nec16 essary modifications in the employees benefits 

17 and protections that are necessary to permit the 


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1 reorganization of the debtor’’ and insert ‘‘min2 imum modifications in the employees benefits 

3 and protections that are necessary to prevent 

4 the liquidation of the debtor’’; and 

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

6 ‘‘(3)(A) If the proposal made under paragraph 

7 (1) provides for a modification of the health insur8 ance benefits of employees of the debtor, the pro9 posal shall provide for a modification of the health 

10 insurance benefits of officers and directors of the 

11 debtor— 

12 ‘‘(i) to, at a minimum, be comparable to 

13 the modification of health insurance benefits of 

14 employees of the debtor; and 

15 ‘‘(ii) such that the health insurance bene16 fits of officers and directors are not more gen17 erous than those of employees of the debtor. 

18 ‘‘(B) If the proposal made under paragraph (1) 

19 provides for a modification of any benefit of employ20 ees of the debtor other than health insurance bene21 fits, including wages and pension benefits, the pro22 posal shall provide for a modification of such benefit 

23 of officers and directors of the debtor that is, at a 

24 minimum, in an amount equal to the percentage by 


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1 which such benefit of employees of the debtor was 

2 modified.’’; 

3 (2) in subsection (c)— 

4 (A) in paragraph (1), by striking ‘‘sub5 section (b)(1)’’ and inserting ‘‘paragraphs (1) 

6 and (3) of subsection (b)’’; 

7 (B) by redesignating paragraphs (2) and 

8 (3) as paragraphs (3) and (4), respectively; and 

9 (C) by inserting after paragraph (1) the 

10 following: 

11 ‘‘(2) the debtor established by clear and con12 vincing evidence that any modification of the bene13 fits and protections of an employee of the debtor 

14 proposed under subsection (b)(1) is the minimum 

15 modification necessary to prevent the liquidation of 

16 the debtor;’’; and 

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

18 ‘‘(g) The rejection of a collective bargaining agree19 ment under this section constitutes a breach of the agree20 ment, and shall entitle employees of the debtor to a claim 

21 for damages.’’. 

22 (b) HEALTH INSURANCE BENEFITS OF RETIRED

23 EMPLOYEES.—Section 1114 of title 11, United States 

24 Code, is amended— 

25 (1) in subsection (f)— 


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1 (A) in paragraph (1)(A), by striking ‘‘nec2 essary modifications in the retiree benefits that 

3 are necessary to permit the reorganization of 

4 the debtor’’ and insert ‘‘minimum modifications 

5 in the retiree benefits that are necessary to pre6 vent the liquidation of the debtor’’; and 

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

8 ‘‘(3) If the proposal made under paragraph (1) pro9 vides for a modification of the health insurance benefits 

10 of retired employees of the debtor, the proposal shall pro11 vide for a modification of the health insurance benefits of 

12 officers and directors of the debtor— 

13 ‘‘(A) to, at a minimum, be comparable to the 

14 modification of health insurance benefits of retired 

15 employees of the debtor; and 

16 ‘‘(B) such that the health insurance benefits of 

17 officers and directors are not more generous than 

18 those of retired employees of the debtor.’’; and 

19 (2) in subsection (g)(3), by striking ‘‘necessary 

20 to permit the reorganization of the debtor’’ and in21 sert ‘‘the minimum modification necessary to pre22 vent the liquidation of the debtor’’. 


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1 SEC. 102. PAYMENT OF INSURANCE BENEFITS TO RETIR2 EES. 

3 (a) IN GENERAL.—Section 1114(j) of title 11, United 

4 States Code, is amended to read as follows: 

5 ‘‘(j)(1) No claim for retiree benefits shall be limited 

6 by section 502(b)(7). 

7 ‘‘(2)(A) A retired employee whose retiree benefits are 

8 modified under subsection (e)(1) or (g) shall have a claim 

9 in an amount equal to the value of the retiree benefits 

10 lost as a result of the modification, which shall be reduced 

11 by the amount paid by a debtor under subparagraph (B). 

12 ‘‘(B)(i) In accordance with section 1129(a)(13)(B), 

13 a debtor shall pay a retired employee with a claim under 

14 subparagraph (A)— 

15 ‘‘(I) cash in an amount equal to the 2-year cost 

16 of premiums for continuation coverage (as defined in 

17 section 602 of the Employee Retirement Income Se18 curity Act of 1974 (29 U.S.C. 1162)) for the retired 

19 employee under section 602(3) of the Employee Re20 tirement Income Security Act of 1974 (29 U.S.C. 

21 1162(3)); or 

22 ‘‘(II) if the retired employee is not eligible for 

23 continuation coverage, cash in an amount equal to 

24 the 2-year cost of premiums for a comparable health 

25 insurance plan offered through a State Exchange, 

26 Federally Facilitated Exchange, or Federal-State 


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1 Partnership Exchange established under the Patient 

2 Protection and Affordable Care Act (42 U.S.C. 

3 18001 et seq.). 

4 ‘‘(ii) Notwithstanding clause (i), if the court deter5 mines it to be in the interest of fairness and equity, the 

6 court may require a debtor to pay a retired employee with 

7 a claim under subparagraph (A) cash in an amount equal 

8 to the cost of premiums for continuation coverage under 

9 clause (i)(I) or for a comparable health insurance plan 

10 under clause (i)(II) for a period of more than 2 years. 

11 ‘‘(iii) The amount paid by a debtor under this sub12 paragraph shall not exceed the amount of the claim under 

13 subparagraph (A). 

14 ‘‘(C) Any amount of the claim under subparagraph 

15 (A) that is not paid under subparagraph (B) shall be a 

16 general unsecured claim.’’. 

17 (b) CONFIRMATION OF PLAN.—Section 1129(a)(13) 

18 of title 11, United States Code, is amended to read as 

19 follows: 

20 ‘‘(13) The plan provides— 

21 ‘‘(A) for the continuation, after the effec22 tive date of the plan, of the payment of all re23 tiree benefits (as defined in section 1114(a)), at 

24 the level established pursuant to subsection 

25 (e)(1) or (g) of section 1114, at any time before 


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1 the confirmation of the plan, for the duration of 

2 the period the debtor has obligated itself to pro3 vide such benefits; and 

4 ‘‘(B) that the holder of a claim under sec5 tion 1114(j)(2)(A) shall receive from the debt6 or, on the effective date of the plan, cash equal 

7 to the amount calculated under section 

8 1114(j)(2)(B).’’. 

9 SEC. 103. FAIR TREATMENT OF COMPENSATION. 

10 (a) PROHIBITION OF BONUS PAYMENTS.—Section 

11 503(c) of title 11, United States Code, is amended— 

12 (1) in paragraph (2)(B), by striking ‘‘or’’ at the 

13 end; 

14 (2) by redesignating paragraph (3) as para15 graph (4); and 

16 (3) by inserting after paragraph (2) the fol17 lowing: 

18 ‘‘(3) a bonus payment to an insider of the debt19 or, including an incentive-based bonus payment; or’’. 

20 (b) INCREASED PRIORITY CLAIM AMOUNT FOR EM21 PLOYEE WAGES AND BENEFITS.—Section 507(a) of title 

22 11, United States Code, is amended— 

23 (1) in paragraph (4)— 

24 (A) by striking ‘‘$10,000’’ and inserting 

25 ‘‘$25,000’’; and 


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1 (B) by striking ‘‘180 days’’ and inserting 

2 ‘‘1 year’’; and 

3 (2) in paragraph (5)— 

4 (A) in subparagraph (A), by striking ‘‘180 

5 days’’ and inserting ‘‘1 year’’; and 

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

7 ‘‘$10,000’’ and inserting ‘‘$25,000’’. 

8 (c) RECOVERY OF EXCESS COMPENSATION.—Section 

9 547 of title 11, United States Code, is amended by adding 

10 at the end the following: 

11 ‘‘(j) The court, upon motion of a party in interest, 

12 may prohibit a transfer of compensation made to an in13 sider of the debtor within 1 year before the date on which 

14 the petition is filed if the court finds, after notice and 

15 hearing, that the transfer— 

16 ‘‘(1) was not made in the ordinary course of 

17 business; or 

18 ‘‘(2) resulted in unjust enrichment.’’. 

19 SEC. 104. VENUE; CHANGE OF VENUE. 

20 Chapter 87 of title 28, United States Code, is amend21 ed— 

22 (1) by amending section 1408 to read as fol23 lows: 


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1 ‘‘§ 1408. Venue of cases under title 11 

2 ‘‘Except as provided in section 1410, a case under 

3 title 11 shall be commenced in the district court for the 

4 district in which the largest share of employees, retired 

5 employees, physical assets, and operations of the person 

6 or entity that is the subject of the case were located in 

7 the year immediately preceding the commencement of the 

8 case.’’; and 

9 (2) in section 1412, by striking ‘‘to a district 

10 court for another district’’ and inserting ‘‘to the dis11 trict court for the district in which the principal 

12 place of business in the United States of the person 

13 or entity that is the subject of the case was located 

14 in the year immediately preceding the commence15 ment of the case’’. 

16 SEC. 105. PROTECTION OF BENEFITS IN CHAPTER 9 BANK17 RUPTCY. 

18 Section 901(a) of title 11, United States Code, is 

19 amended— 

20 (1) by inserting ‘‘507(a)(4), 507(a)(5),’’ after 

21 ‘‘507(a)(2)’’; 

22 (2) by inserting ‘‘1113, 1114,’’ after 

23 ‘‘1111(b)’’; and 

24 (3) by inserting ‘‘1129(a)(13),’’ after 

25 ‘‘1129(a)(10)’’. 


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1 SEC. 106. REQUIREMENT TO MAKE PENSION CONTRIBU2 TIONS. 

3 (a) REQUIREMENT TO PAY MINIMUM FUNDING CON4 TRIBUTIONS.—Subchapter I of chapter 11 of title 11, 

5 United States Code, is amended by adding at the end the 

6 following: 

7 ‘‘§ 1117. Duty of debtor in possession to make re8 quired pension contributions 

9 ‘‘(a) DEFINITIONS.—In this section— 

10 ‘‘(1) the term ‘pension plan’ has the meaning 

11 given that term under section 3 of the Employee Re12 tirement Income Security Act of 1974 (29 U.S.C. 

13 1002); and 

14 ‘‘(2) the term ‘required pension contributions’ 

15 means contributions necessary to satisfy the min16 imum funding standards under sections 412 and 

17 430 of the Internal Revenue Code of 1986 and sec18 tions 302 and 303 of the Employee Retirement In19 come Security Act of 1974 (29 U.S.C. 1082 and 

20 1083), including any required installment contribu21 tions. 

22 ‘‘(b) REQUIREMENT.—A debtor in possession that 

23 sponsors a pension plan or is a member of the controlled 

24 group with respect to such a plan, or the trustee of the 

25 debtor in possession, shall— 


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1 ‘‘(1) make all required pension contributions to 

2 the pension plan that become due after the filing of 

3 the petition; and 

4 ‘‘(2) make such contributions on or before the 

5 due dates specified in section 430(j) of the Internal 

6 Revenue Code and section 303(j) of the Employee 

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

8 1083(j)).’’. 

9 (b) TREATMENT AS ADMINISTRATIVE EXPENSES.— 

10 Section 503(b) of title 11, United States Code, is amend11 ed— 

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

13 the end; 

14 (2) in paragraph (9), by striking the period at 

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

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

17 ‘‘(10) any required pension contributions under 

18 section 1117 due to be made after the filing of the 

19 petition that are unpaid.’’. 

20 (c) PERFECTION OF STATUTORY LIENS FOR MISSED

21 PENSION CONTRIBUTIONS.—Section 362(b) of title 11, 

22 United States Code, is amended— 

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

24 end; 


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

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

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

4 ‘‘(29) under subsection (a), of any act to per5 fect, or to maintain or continue the perfection of, a 

6 statutory lien imposed by section 430(k) of the In7 ternal Revenue Code of 1986 or section 303(k) of 

8 the Employee Retirement Income Security Act (29 

9 U.S.C. 1083(k)) (which shall not be voidable under 

10 section 545 of this title), for failure to make con11 tribution payments required under those sections, 

12 without regard to whether such contributions be13 came due or whether such lien arose before or after 

14 the filing of the petition.’’. 

15 TITLE II—PROTECTION OF EM16 PLOYEE AND RETIREE 

17 HEALTH BENEFITS 

18 SEC. 201. NOTIFICATION OF EXTENT TO WHICH HEALTH 

19 BENEFITS CAN BE MODIFIED OR TERMI20 NATED. 

21 (a) INCLUSION IN SUMMARY PLAN DESCRIPTION.— 

22 Section 102(b) of the Employee Retirement Income Secu23 rity Act of 1974 (29 U.S.C. 1022) is amended by inserting 

24 ‘‘; in the case of a group health plan (as so defined), 

25 whether the provisions of the plan permit the plan sponsor 


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1 or any employer participating in the plan to unilaterally 

2 modify or terminate the benefits under the plan with re3 spect to employees, retired employees, and beneficiaries, 

4 and when and to what extent benefits under the plan are 

5 fully vested with respect to employees, retired employees, 

6 and beneficiaries’’ after ‘‘the name and address of such 

7 issuer’’. 

8 (b) PRESUMPTION THAT RETIRED EMPLOYEE

9 HEALTH BENEFITS CANNOT BE MODIFIED OR TERMI10 NATED.—Section 502 of the Employee Retirement Income 

11 Security Act of 1974 (29 U.S.C. 1132) is amended by 

12 adding at the end the following new subsection: 

13 ‘‘(n) In the case of a suit brought under this title 

14 by a participant or beneficiary relating to benefits of a 

15 retired employee or the dependents of a retired employee 

16 under a group health plan (as defined in section 

17 733(a)(1)), the presumption for purposes of such suit 

18 shall be that as of the date an employee retires or com19 pletes 20 years of service with the employer, benefits avail20 able under the plan during retirement of the employee are 

21 fully vested and cannot be modified or terminated for the 

22 life of the employee or, if longer, the life of the employee’s 

23 spouse. This presumption can be overcome only upon a 

24 showing, by clear and convincing evidence, that the terms 

25 of the group health plan allow for a modification or termiVerDate Mar 15 2010 03:54 Jun 05, 2014 Jkt 039200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S2418.IS S2418

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1 nation of benefits available under the plan and that the 

2 employee, prior to becoming a participant in the plan, was 

3 made aware, in clear and unambiguous terms, that the 

4 plan allowed for such modification or termination of bene5 fits.’’. 

6 SEC. 202. PROTECTION OF RETIREES UNDER CERTAIN COL7 LECTIVELY BARGAINED AGREEMENTS. 

8 Section 8 of the National Labor Relations Act (29 

9 U.S.C. 158) is amended by adding at the end the fol10 lowing: 

11 ‘‘(h) It shall be an unfair labor practice for any labor 

12 organization and any employer to enter into any contract 

13 or agreement, express or implied, whereby the organiza14 tion and employer agree to modify the terms of any pre15 vious agreement in a manner that would result in a reduc16 tion or termination of retiree health insurance benefits 

17 provided to an employee or a dependent of an employee 

18 under the previous agreement, if such modification of the 

19 terms of the previous agreement occurs after the date on 

20 which the employee retires.’’. 

21 SEC. 203. COMPTROLLER GENERAL REPORT. 

22 (a) IN GENERAL.—Not later than 180 days after the 

23 date of enactment of this Act, the Comptroller General 

24 of the United States shall submit to Congress a report 


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1 on the strategies that corporations use to avoid obligations 

2 to pay promised employee and retiree benefits. 

3 (b) CONTENTS.—The report under subsection (a) 

4 shall include a discussion of— 

5 (1) the use of spin-offs, mergers, subsidiaries, 

6 bankruptcies, asset sales, and other strategies to 

7 avoid obligations to pay promised employee and re8 tiree benefits; 

9 (2) the impact of such avoidance on the finan10 cial, physical, and mental well-being of employees 

11 and retirees; 

12 (3) the impact on Federal and State budgets 

13 when employers terminate or reduce the benefits of 

14 employees and retirees, including the costs that are 

15 incurred when employees and retirees seek assist16 ance from Federal and State government programs 

17 and services as a result of the termination or reduc18 tion of their employment-related benefits; and 

19 (4) recommendations to prevent corporations 

20 from evading contractual obligations to pay em21 ployee and retiree benefits. 

Æ 


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