To amend title 11 of the United States Code to establish a priority for the payment of claims for retiree health benefits in liquidation cases under chapters 7 and 11.

SECTION 1. PRIORITY OF CLAIMS FOR RETIREE HEALTH BENEFITS.

    (a) Definition.--Section 101 of title 11, United States Code, is 
amended--
            (1) by redesignating paragraphs (4) through (12A) as 
        paragraphs (3) through (12), respectively,
            (2) by redesignating paragraphs (48) through (55) as 
        paragraphs (53) through (68), respectively,
            (3) by inserting after paragraph (47) the following:
            ``(52) `retiree health benefits' means payments to any 
        entity or person for the purpose of providing or reimbursing 
        payments for retired employees and their spouses and 
        dependents, for medical, surgical, or hospital care benefits 
        under any plan, fund, or program (through the purchase of 
        insurance or otherwise) maintained or established in whole or 
        in part by the debtor prior to filing a petition commencing a 
        case under this title;'', and
            (4) by redesignating paragraphs (21A) through (47) as 
        paragraphs (22) through (51), respectively,
    (b) Priority Under Chapter 7.--(1) Section 726(a)(1) of title 11, 
United States Code, is amended to read as follows:
            ``(1) first--
                    ``(A) except as provided in subparagraph (B), in 
                payment of claims of the kind specified in, and in the 
                order specified in section 507 of this title, proof of 
                which is timely filed under section 501 of this title 
                or tardily filed before the date on which the trustee 
                commences distribution under this section; and
                    ``(B) immediately after payment of claims of the 
                kind specified in section 507(a)(4), in payment of 
                allowed unsecured claims for retiree health benefits, 
                but only to the extent of the aggregate amount that 
                represents $10,000 multiplied by the number of former 
                employees with respect to whom a retiree health benefit 
                accrues;''.
    (2) Section 724(b)(2) of title 11, United States Code, is amended 
by inserting ``, and to holders of claims for retiree health benefits 
payable under section 726(a)(1)(B) of this title,'' after ``this 
title''.
    (c) Priority Under Chapter 11.--Section 1129(a) of title 11, United 
States Code, is amended--
            (1) in paragraph (9)--
                    (A) in subparagraph (B)--
                            (i) by inserting ``subject to subparagraph 
                        (D)'' after ``receive'', and
                            (ii) by striking ``and'' at the end,
                    (B) in subparagraph (C) by striking the period at 
                the end and inserting ``; and'', and
                    (C) by adding at the end the following:
                    ``(D) if liquidation is proposed in the plan, with 
                respect to a class of claims for retiree health 
                benefits, such class will receive immediately after 
                payment of claims of the kinds specified in paragraphs 
                (1), (2), (3), and (4) of section 507(a) of this 
                title--
                            ``(i) if such class has accepted the plan, 
                        deferred cash payments of a value, as of the 
                        effective date of the plan; or
                            ``(ii) if such class has not accepted the 
                        plan, cash on the effective date of the plan;
                equal to the allowed aggregate amount of such claims, 
                but only to the extent of the aggregate amount that 
                represents $10,000 multiplied by the number of former 
                employees with respect to whom a retiree health benefit 
                accrues.'', and
            (2) by amending paragraph (13) to read as follows:
            ``(13) The plan provides--
                    ``(A) except as provided in subparagraph (B), for 
                the continuation after its effective date of payment of 
                all retiree benefits (as defined in section 1114 of 
                this title) at the level established pursuant to 
                subsection (e)(1)(B) or (g) of section 1114 of this 
                title, at any time prior to confirmation of the plan, 
                for the duration of the period the debtor has obligated 
                itself to provide such benefits; and
                    ``(B) if the plan provides for liquidation, for the 
                payment of allowed unsecured claims for retiree health 
                benefits, but only to the extent of the aggregate 
                amount that represents $10,000 multiplied by the number 
                of former employees with respect to whom a retiree 
                health benefit accrues.''.

SEC. 2. RULE OF CONSTRUCTION.

    The amendments made by this Act shall not be construed to limit any 
priority to which claims for retiree health benefits are entitled under 
the provisions of title 11 of the United States Code that are not 
amended by this Act.

SEC. 3. EFFECTIVE DATES; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this Act 
and the amendments made by section 1 shall take effect on the date of 
the enactment of this Act.
    (b) Application of Amendments.--(1) Except as provided in paragraph 
(2), the amendments made by section 1 shall apply only with respect to 
cases commenced under title 11, United States Code, after the date of 
the enactment of this Act.
    (2) The amendments made by section 1 shall apply with respect to--
            (A) cases commenced under chapter 11 of title 11, United 
        States Code, on or after March 1, 1989; and
            (B) cases converted from chapter 11 of title 11, United 
        States Code, to chapter 7 of such Code on or after September 1, 
        1991.

Summary: Amends Federal bankruptcy law to establish a payment priority for retiree health benefit claims, with an aggregate limitation of $10,000 multiplied by the relevant number of former employees.