I 
109TH CONGRESS 
2D SESSION 
H. R. 5113 
To amend title 11, United States Code, with respect to reform of executive 
compensation in corporate bankruptcies. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 6, 2006 
Mr. CONYERS introduced the following bill; which was referred to the 
Committee on the Judiciary 
A BILL 
To amend title 11, United States Code, with respect to 
reform of executive compensation in corporate bankruptcies. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Fairness and Account-
ability in Reorganizations Act of 2006’’. 
SEC. 2. FINDINGS. 
Congress finds that— 
(1) it is becoming more common for corpora-
tions that file for bankruptcy protection under chap-
ter 11 of title 11, United States Code, to ask for 
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great sacrifices from workers, retirees, creditors, and 
former shareholders, while executives provide them-
selves with generous bonuses and other forms of lu-
crative compensation; 
(2) in the case of one company, an executive 
pay package for key employees would have given ex-
ecutives and managers $510,000,000 in compensa-
tion, while rank-and-file workers were asked to take 
large wage cuts or forced to lose their jobs; 
(3) decency requires that the highly paid not 
seek to enrich themselves on the backs of working 
families; 
(4) some bankruptcies involve companies with 
both foreign and domestic operations, and judges 
need to be able to evaluate the entirety of the oper-
ations when deciding whether sacrifices by American 
workers and retirees are necessary; and 
(5) there is a need for fairness and account-
ability and a new partnership for the future of the 
American workforce. 
SEC. 3. EXECUTIVE COMPENSATION. 
Section 1129(a)(5) of title 11, United States Code, 
is amended— 
(1) in subparagraph (A)(ii), by striking ‘‘and’’ 
at the end; and 
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(2) 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 sub-
ject to the approval of, the court, as reasonable.’’. 
SEC. 4. LIMITATIONS ON COMPENSATION ENHANCEMENTS. 
Section 503(c) of title 11, United States Code, is 
amended— 
(1) in paragraph (1), by inserting ‘‘, or for the 
payment of a performance, incentive, or other bonus, 
or any other compensation enhancement’’ after ‘‘re-
main with the debtor’s business’’; and 
(2) by striking paragraph (3) and inserting the 
following: 
‘‘(3) other transfers or obligations, whether or 
not outside of the ordinary course of business, to or 
for the benefit of officers, managers, or consultants 
retained by the debtor, before or after the filing of 
the petition, in the absence of a finding by the court 
based upon evidence in the record, and without def-
erence to the debtor’s request for such payments, 
that such transfers or obligations are essential to the 
survival of the business or (in the case of a liquida-
tion of some or all of the debtors’ assets) essential 
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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 provided, and 
then only to the extent that the court finds those 
transfers or obligations are reasonable under the cir-
cumstances of the case.’’. 
SEC. 5. TREATMENT OF FOREIGN AFFILIATES. 
(a) COLLECTIVE BARGAINING AGREEMENTS.—Sec-
tion 1113(d) of title 11, United States Code, is amended 
by adding at the end the following: 
‘‘(4) FOREIGN AFFILIATES.—In determining whether 
the proposal required by subsection (b)(1) provides for 
those necessary modifications in employee benefits and 
protections that are necessary to permit the reorganization 
of the debtor and assures that all creditors, the debtor, 
and all affected parties are treated fairly and equitably, 
the court shall take into account the ongoing impact on 
the debtor of the debtor’s relationship with all subsidiaries 
and affiliates, regardless of whether any such subsidiary 
or affiliate is domestic or nondomestic, or whether any 
such subsidiary or affiliate is a debtor entity.’’. 
(b) RETIREE HEALTH BENEFITS.—Section 1114 of 
title 11, United States Code, is amended by adding at the 
end the following: 
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‘‘(n) RETIREE HEALTH BENEFITS; FOREIGN AFFILI-
ATES.—In determining whether the proposal required by 
subsection (f)(1)(A) provides for those necessary modifica-
tions in retiree benefits that are necessary to permit the 
reorganization of the debtor and assures that all creditors, 
the debtor, and all affected parties are treated fairly and 
equitably, the court shall take into account the ongoing 
impact on the debtor of the debtor’s relationship with all 
subsidiaries and affiliates, regardless of whether any such 
subsidiary or affiliate is domestic or nondomestic, or 
whether any such subsidiary or affiliate is a debtor enti-
ty.’’. 
SEC. 6. EFFECTIVE DATE. 
Notwithstanding any other provision of law, the 
amendments made by this Act shall apply to any case 
under chapter 11 of title 11, United States Code, filed 
or pending on or after October 1, 2005. 
Æ 
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