TITLE III—RESTRICTING EXECU-
TIVE 
COMPENSATION 
PRO-
GRAMS 
SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM 
BANKRUPTCY. 
Section 1129(a) of title 11, United States Code, is 
amended— 
(1) in paragraph (4), by adding at the end the 
following: ‘‘Except for compensation subject to re-
view under paragraph (5), payments or other dis-
tributions under the plan to or for the benefit of in-
siders, senior executive officers, and any of the twen-
ty next most highly compensated employees or con-
sultants providing services to the debtor, shall not be 
approved except as part of a program of payments 
or distributions generally applicable to employees of 
the debtor, and only to the extent that the court de-
termines that such payments are not excessive or 
disproportionate compared to distributions to the 
debtor’s nonmanagement workforce.’’; and 
(2) in paragraph (5)— 
(A) in subparagraph (A)(ii), by striking 
‘‘and’’ at the end; and 
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(B) in subparagraph (B), by striking the 
period at the end and inserting the following: ‘‘; 
and 
‘‘(C) the compensation disclosed pursuant 
to subparagraph (B) has been approved by, or 
is subject to the approval of, the court as rea-
sonable when compared to individuals holding 
comparable positions at comparable companies 
in the same industry and not disproportionate 
in light of economic concessions by the debtor’s 
nonmanagement workforce during the case.’’. 
SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION EN-
HANCEMENTS. 
Section 503(c) of title 11, United States Code, is 
amended— 
(1) in paragraph (1)— 
(A) by inserting ‘‘, a senior executive offi-
cer, or any of the twenty next most highly com-
pensated employees or consultants’’ after ‘‘an 
insider’’; 
(B) by inserting ‘‘or for the payment of 
performance or incentive compensation, or a 
bonus of any kind, or other financial returns 
designed to replace or enhance incentive, stock, 
or other compensation in effect before the date 
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of the commencement of the case,’’ after ‘‘re-
main with the debtor’s business,’’; and 
(C) by inserting ‘‘clear and convincing’’ be-
fore ‘‘evidence in the record’’; and 
(2) by amending paragraph (3) to read as fol-
lows: 
‘‘(3) other transfers or obligations, to or for the 
benefit of insiders, senior executive officers, man-
agers, or consultants providing services to the debt-
or, in the absence of a finding by the court, based 
upon clear and convincing evidence, and without def-
erence to the debtor’s request for such payments, 
that such transfers or obligations are essential to the 
survival of the debtor’s business or (in the case of 
a liquidation of some or all of the debtor’s assets) 
essential to the orderly liquidation and maximization 
of value of the assets of the debtor, in either case, 
because of the essential nature of the services pro-
vided, and then only to the extent that the court 
finds such transfers or obligations are reasonable 
compared to individuals holding comparable posi-
tions at comparable companies in the same industry 
and not disproportionate in light of economic conces-
sions by the debtor’s nonmanagement workforce dur-
ing the case.’’. 
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SEC. 303. ASSUMPTION OF EXECUTIVE BENEFIT PLANS. 
Section 365 of title 11, United States Code, is 
amended— 
(1) in subsection (a), by striking ‘‘and (d)’’ and 
inserting ‘‘(d), (q), and (r)’’; and 
(2) by adding at the end the following: 
‘‘(q) No deferred compensation arrangement for the 
benefit of insiders, senior executive officers, or any of the 
twenty next most highly compensated employees of the 
debtor shall be assumed if a defined benefit plan for em-
ployees of the debtor has been terminated pursuant to sec-
tion 4041 or 4042 of the Employee Retirement Income 
Security Act of 1974, on or after the date of the com-
mencement of the case or within 180 days before the date 
of the commencement of the case. 
‘‘(r) No plan, fund, program, or contract to provide 
retiree benefits for insiders, senior executive officers, or 
any of the twenty next most highly compensated employees 
of the debtor shall be assumed if the debtor has obtained 
relief under subsection (g) or (h) of section 1114 to impose 
reductions in retiree benefits or under subsection (d) or 
(e) of section 1113 to impose reductions in the health ben-
efits of active employees of the debtor, or reduced or elimi-
nated health benefits for active or retired employees within 
180 days before the date of the commencement of the 
case.’’. 
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SEC. 304. RECOVERY OF EXECUTIVE COMPENSATION. 
Title 11, United States Code, is amended by inserting 
after section 562 the following: 
‘‘SEC. 563. RECOVERY OF EXECUTIVE COMPENSATION. 
‘‘(a) If a debtor has obtained relief under subsection 
(d) of section 1113, or subsection (g) of section 1114, by 
which the debtor reduces the cost of its obligations under 
a collective bargaining agreement or a plan, fund, or pro-
gram for retiree benefits as defined in section 1114(a), 
the court, in granting relief, shall determine the percent-
age diminution in the value of the obligations when com-
pared to the debtor’s obligations under the collective bar-
gaining agreement, or with respect to retiree benefits, as 
of the date of the commencement of the case under this 
title before granting such relief. In making its determina-
tion, the court shall include reductions in benefits, if any, 
as a result of the termination pursuant to section 4041 
or 4042 of the Employee Retirement Income Security Act 
of 1974, of a defined benefit plan administered by the 
debtor, or for which the debtor is a contributing employer, 
effective at any time on or after 180 days before the date 
of the commencement of a case under this title. The court 
shall not take into account pension benefits paid or pay-
able under such Act as a result of any such termination. 
‘‘(b) If a defined benefit pension plan administered 
by the debtor, or for which the debtor is a contributing 
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employer, has been terminated pursuant to section 4041 
or 4042 of the Employee Retirement Income Security Act 
of 1974, effective at any time on or after 180 days before 
the date of the commencement of a case under this title, 
but a debtor has not obtained relief under subsection (d) 
of section 1113, or subsection (g) of section 1114, then 
the court, upon motion of a party in interest, shall deter-
mine the percentage diminution in the value of benefit ob-
ligations when compared to the total benefit liabilities be-
fore such termination. The court shall not take into ac-
count pension benefits paid or payable under title IV of 
the Employee Retirement Income Security Act of 1974 as 
a result of any such termination. 
‘‘(c) Upon the determination of the percentage dimi-
nution in value under subsection (a) or (b), the estate shall 
have a claim for the return of the same percentage of the 
compensation paid, directly or indirectly (including any 
transfer to a self-settled trust or similar device, or to a 
nonqualified deferred compensation plan under section 
409A(d)(1) of the Internal Revenue Code of 1986) to any 
officer of the debtor serving as member of the board of 
directors of the debtor within the year before the date of 
the commencement of the case, and any individual serving 
as chairman or lead director of the board of directors at 
the time of the granting of relief under section 1113 or 
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1114 or, if no such relief has been granted, the termi-
nation of the defined benefit plan. 
‘‘(d) The trustee or a committee appointed pursuant 
to section 1102 may commence an action to recover such 
claims, except that if neither the trustee nor such com-
mittee commences an action to recover such claim by the 
first date set for the hearing on the confirmation of plan 
under section 1129, any party in interest may apply to 
the court for authority to recover such claim for the ben-
efit of the estate. The costs of recovery shall be borne by 
the estate. 
‘‘(e) The court shall not award postpetition com-
pensation under section 503(c) or otherwise to any person 
subject to subsection (c) if there is a reasonable likelihood 
that such compensation is intended to reimburse or re-
place compensation recovered by the estate under this sec-
tion.’’. 
SEC. 305. PREFERENTIAL COMPENSATION TRANSFER. 
Section 547 of title 11, United States Code, is 
amended by adding at the end the following: 
‘‘(j) The trustee may avoid a transfer to or for the 
benefit of an insider (including an obligation incurred for 
the benefit of an insider under an employment contract) 
made in anticipation of bankruptcy, or a transfer made 
in anticipation of bankruptcy to a consultant who is for-
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merly an insider and who is retained to provide services 
to an entity that becomes a debtor (including an obligation 
under a contract to provide services to such entity or to 
a debtor) made or incurred on or within 1 year before the 
filing of the petition. No provision of subsection (c) shall 
constitute a defense against the recovery of such transfer. 
The trustee or a committee appointed pursuant to section 
1102 may commence an action to recover such transfer, 
except that, if neither the trustee nor such committee com-
mences an action to recover such transfer by the time of 
the commencement of a hearing on the confirmation of 
a plan under section 1129, any party in interest may apply 
to the court for authority to recover the claims for the 
benefit of the estate. The costs of recovery shall be borne 
by the estate.’’. 
TITLE IV—OTHER PROVISIONS 
SEC. 401. UNION PROOF OF CLAIM. 
Section 501(a) of title 11, United States Code, is 
amended by inserting ‘‘, including a labor organization,’’ 
after ‘‘A creditor’’. 
SEC. 402. EXCEPTION FROM AUTOMATIC STAY. 
Section 362(b) of title 11, United States Code, is 
amended— 
(1) in paragraph (27), by striking ‘‘and’’ at the 
end; 
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(2) in paragraph (28), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(29) of the commencement or continuation of 
a grievance, arbitration, or similar dispute resolution 
proceeding established by a collective bargaining 
agreement that was or could have been commenced 
against the debtor before the filing of a case under 
this title, or the payment or enforcement of an 
award or settlement under such proceeding.’’. 
Æ 
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