Title: Protecting Employees and Retirees in Business Bankruptcies Act of 2018
Policy area: Finance and Financial Sector

Summary:
Protecting Employees and Retirees in Business Bankruptcies Act of 2018
This bill amends federal bankruptcy law to modify provisions related to Chapter 11 bankruptcy, which typically involves the reorganization of a debtor company's assets and debts. Specifically, the bill modifies provisions governing: (1) employee and retiree recoveries and losses, and (2) executive compensation programs.
With respect to employee and retiree recoveries and losses, the bill does the following:
With respect to executive compensation, the bill does the following:
In addition, the bill grants creditor status to labor organizations for purposes of filing a proof of claim.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2518 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  2d Session
                                S. 2518

   To amend title 11, United States Code, to improve protections for 
            employees and retirees in business bankruptcies.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 7, 2018

Mr. Durbin (for himself, Mr. Whitehouse, and Mr. Brown) 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.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Protecting 
Employees and Retirees in Business Bankruptcies Act of 2018''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
        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.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Business bankruptcies have increased sharply in recent 
        years and remain at high levels. These bankruptcies include 
        several of the largest business bankruptcy filings in history. 
        As the use of bankruptcy has expanded, job preservation and 
        retirement security are placed at greater risk.
            (2) Laws enacted to improve recoveries for employees and 
        retirees and limit their losses in bankruptcy cases have not 
        kept pace with the increasing and broader use of bankruptcy by 
        businesses in all sectors of the economy. However, while 
        protections for employees and retirees in bankruptcy cases have 
        eroded, management compensation plans devised for those in 
        charge of troubled businesses have become more prevalent and 
        are escaping adequate scrutiny.
            (3) Changes in the law regarding these matters are urgently 
        needed as bankruptcy is used to address increasingly more 
        complex and diverse conditions affecting troubled businesses 
        and industries.

        TITLE I--IMPROVING RECOVERIES FOR EMPLOYEES AND RETIREES

SEC. 101. INCREASED WAGE PRIORITY.

    Section 507(a) of title 11, United States Code, is amended--
            (1) in paragraph (4)--
                    (A) by striking ``$10,000'' and inserting 
                ``$20,000'';
                    (B) by striking ``within 180 days''; and
                    (C) by striking ``or the date of the cessation of 
                the debtor's business, whichever occurs first,''; and
            (2) in paragraph (5)--
                    (A) in subparagraph (A)--
                            (i) by striking ``within 180 days''; and
                            (ii) by striking ``or the date of the 
                        cessation of the debtor's business, whichever 
                        occurs first''; and
                    (B) by striking subparagraph (B) and inserting the 
                following:
                    ``(B) for each such plan, to the extent of the 
                number of employees covered by each such plan, 
                multiplied by $20,000.''.

SEC. 102. CLAIM FOR STOCK VALUE LOSSES IN DEFINED CONTRIBUTION PLANS.

    Section 101(5) of title 11, United States Code, is amended--
            (1) in subparagraph (A), by striking ``or'' at the end;
            (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following:
                    ``(C) right or interest in equity securities of the 
                debtor, or an affiliate of the debtor, if--
                            ``(i) the equity securities are held in a 
                        defined contribution plan (within the meaning 
                        of section 3(34) of the Employee Retirement 
                        Income Security Act of 1974 (29 U.S.C. 
                        1002(34))) for the benefit of an individual who 
                        is not an insider, a senior executive officer, 
                        or any of the twenty next most highly 
                        compensated employees of the debtor (if one or 
                        more are not insiders);
                            ``(ii) the equity securities were 
                        attributable to either employer contributions 
                        by the debtor or an affiliate of the debtor, or 
                        elective deferrals (within the meaning of 
                        section 402(g) of the Internal Revenue Code of 
                        1986), and any earnings thereon; and
                            ``(iii) an employer or plan sponsor who has 
                        commenced a case under this title has committed 
                        fraud with respect to such plan or has 
                        otherwise breached a duty to the participant 
                        that has proximately caused the loss of 
                        value.''.

SEC. 103. PRIORITY FOR SEVERANCE PAY.

    Section 503(b) of title 11, United States Code, is amended--
            (1) in paragraph (8)(B), by striking ``and'' at the end;
            (2) in paragraph (9), by striking the period and inserting 
        a semicolon; and
            (3) by adding at the end the following:
            ``(10) severance pay owed to employees of the debtor (other 
        than to an insider, other senior management, or a consultant 
        retained to provide services to the debtor), under a plan, 
        program, or policy generally applicable to employees of the 
        debtor (but not under an individual contract of employment), or 
        owed pursuant to a collective bargaining agreement, for layoff 
        or termination on or after the date of the filing of the 
        petition, which pay shall be deemed earned in full upon such 
        layoff or termination of employment; and''.

SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RETIREES.

    Section 1129(a) of title 11, United States Code is amended--
            (1) by striking paragraph (13) and inserting the following:
            ``(13) With respect to retiree benefits, as that term is 
        defined in section 1114(a), the plan--
                    ``(A) provides for the continuation after the 
                effective date of the plan of payment of all retiree 
                benefits at the level established pursuant to 
                subsection (e)(1)(B) or (g) of section 1114 at any time 
                before the date of confirmation of the plan, for the 
                duration of the period for which the debtor has 
                obligated itself to provide such benefits, or if no 
                modifications are made before confirmation of the plan, 
                the continuation of all such retiree benefits 
                maintained or established in whole or in part by the 
                debtor before the date of the filing of the petition; 
                and
                    ``(B) provides for recovery of claims arising from 
                the modification of retiree benefits or for other 
                financial returns, as negotiated by the debtor and the 
                authorized representative (to the extent that such 
                returns are paid under, rather than outside of, a 
                plan).''; and
            (2) by adding at the end the following:
            ``(17) The plan provides for recovery of damages payable 
        for the rejection of a collective bargaining agreement, or for 
        other financial returns as negotiated by the debtor and the 
        authorized representative under section 1113 (to the extent 
        that such returns are paid under, rather than outside of, a 
        plan).''.

SEC. 105. PRIORITY FOR WARN ACT DAMAGES.

    Section 503(b)(1)(A)(ii) of title 11, United States Code is amended 
to read as follows:
                    ``(ii) wages and benefits awarded pursuant to a 
                judicial proceeding or a proceeding of the National 
                Labor Relations Board as back pay or damages 
                attributable to any period of time occurring after the 
                date of commencement of the case under this title, as a 
                result of a violation of Federal or State law by the 
                debtor, without regard to the time of the occurrence of 
                unlawful conduct on which the award is based or to 
                whether any services were rendered on or after the 
                commencement of the case, including an award by a court 
                under section 5 of the Worker Adjustment and Retraining 
                Notification Act (29 U.S.C. 2104) of up to 60 days' pay 
                and benefits following a layoff that occurred or 
                commenced at a time when such award period includes a 
                period on or after the commencement of the case, if the 
                court determines that payment of wages and benefits by 
                reason of the operation of this clause will not 
                substantially increase the probability of layoff or 
                termination of current employees or of nonpayment of 
                domestic support obligations during the case under this 
                title;''.

           TITLE II--REDUCING EMPLOYEES' AND RETIREES' LOSSES

SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREEMENTS.

    Section 1113 of title 11, United States Code, is amended by 
striking subsections (a) through (f) and inserting the following:
    ``(a) The debtor in possession, or the trustee if one has been 
appointed under this chapter, other than a trustee in a case covered by 
subchapter IV of this chapter and by title I of the Railway Labor Act 
(45 U.S.C. 151 et seq.), may reject a collective bargaining agreement 
only in accordance with this section. In this section, a reference to 
the trustee includes the debtor in possession.
    ``(b) No provision of this title shall be construed to permit the 
trustee to unilaterally terminate or alter any provision of a 
collective bargaining agreement before complying with this section. The 
trustee shall timely pay all monetary obligations arising under the 
terms of the collective bargaining agreement. Any such payment required 
to be made before a plan confirmed under section 1129 is effective has 
the status of an allowed administrative expense under section 503.
    ``(c)(1) If the trustee seeks modification of a collective 
bargaining agreement, the trustee shall provide notice to the labor 
organization representing the employees covered by the collective 
bargaining agreement that modifications are being proposed under this 
section, and shall promptly provide an initial proposal for 
modifications to the collective bargaining agreement. Thereafter, the 
trustee shall confer in good faith with the labor organization, at 
reasonable times and for a reasonable period in light of the complexity 
of the case, in attempting to reach mutually acceptable modifications 
of the collective bargaining agreement.
    ``(2) The initial proposal and subsequent proposals by the trustee 
for modification of a collective bargaining agreement shall be based 
upon a business plan for the reorganization of the debtor, and shall 
reflect the most complete and reliable information available. The 
trustee shall provide to the labor organization all information that is 
relevant for negotiations. The court may enter a protective order to 
prevent the disclosure of information if disclosure could compromise 
the position of the debtor with respect to the competitors in the 
industry of the debtor, subject to the needs of the labor organization 
to evaluate the proposals of the trustee and any application for 
rejection of the collective bargaining agreement or for interim relief 
pursuant to this section.
    ``(3) In consideration of Federal policy encouraging the practice 
and process of collective bargaining and in recognition of the 
bargained-for expectations of the employees covered by the collective 
bargaining agreement, modifications proposed by the trustee--
            ``(A) shall be proposed only as part of a program of 
        workforce and nonworkforce cost savings devised for the 
        reorganization of the debtor, including savings in management 
        personnel costs;
            ``(B) shall be limited to modifications designed to achieve 
        a specified aggregate financial contribution for the employees 
        covered by the collective bargaining agreement (taking into 
        consideration any labor cost savings negotiated within the 12-
        month period before the filing of the petition), and shall be 
        not more than the minimum savings essential to permit the 
        debtor to exit bankruptcy, such that confirmation of a plan of 
        reorganization is not likely to be followed by the liquidation, 
        or the need for further financial reorganization, of the debtor 
        (or any successor to the debtor) in the short term; and
            ``(C) shall not be disproportionate or overly burden the 
        employees covered by the collective bargaining agreement, 
        either in the amount of the cost savings sought from such 
        employees or the nature of the modifications.
    ``(d)(1) If, after a period of negotiations, the trustee and the 
labor organization have not reached an agreement over mutually 
satisfactory modifications, and further negotiations are not likely to 
produce mutually satisfactory modifications, the trustee may file a 
motion seeking rejection of the collective bargaining agreement after 
notice and a hearing. Absent agreement of the parties, no such hearing 
shall be held before the expiration of the 21-day period beginning on 
the date on which notice of the hearing is provided to the labor 
organization representing the employees covered by the collective 
bargaining agreement. Only the debtor and the labor organization may 
appear and be heard at such hearing. An application for rejection shall 
seek rejection effective upon the entry of an order granting the 
relief.
    ``(2) In consideration of Federal policy encouraging the practice 
and process of collective bargaining and in recognition of the 
bargained-for expectations of the employees covered by the collective 
bargaining agreement, the court may grant a motion seeking rejection of 
a collective bargaining agreement only if, based on clear and 
convincing evidence--
            ``(A) the court finds that the trustee has complied with 
        the requirements of subsection (c);
            ``(B) the court has considered alternative proposals by the 
        labor organization and has concluded that such proposals do not 
        meet the requirements of subsection (c)(3)(B);
            ``(C) the court finds that further negotiations regarding 
        the proposal of the trustee or an alternative proposal by the 
        labor organization are not likely to produce an agreement;
            ``(D) the court finds that implementation of the proposal 
        of the trustee shall not--
                    ``(i) cause a material diminution in the purchasing 
                power of the employees covered by the collective 
                bargaining agreement;
                    ``(ii) adversely affect the ability of the debtor 
                to retain an experienced and qualified workforce; or
                    ``(iii) impair the labor relations of the debtor 
                such that the ability to achieve a feasible 
                reorganization would be compromised; and
            ``(E) the court concludes that rejection of the collective 
        bargaining agreement and immediate implementation of the 
        proposal of the trustee is essential to permit the debtor to 
        exit bankruptcy, such that confirmation of a plan of 
        reorganization is not likely to be followed by liquidation, or 
        the need for further financial reorganization, of the debtor 
        (or any successor to the debtor) in the short term.
    ``(3) If the trustee has implemented a program of incentive pay, 
bonuses, or other financial returns for insiders, senior executive 
officers, or the twenty next most highly compensated employees or 
consultants providing services to the debtor during the bankruptcy, or 
such a program was implemented within 180 days before the date of the 
filing of the petition, the court shall presume that the trustee has 
failed to satisfy the requirements of subsection (c)(3)(C).
    ``(4) In no case shall the court enter an order rejecting a 
collective bargaining agreement that would result in modifications to a 
level lower than the level proposed by the trustee in the proposal 
found by the court to have complied with the requirements of this 
section.
    ``(5) At any time after the date on which an order rejecting a 
collective bargaining agreement is entered, or in the case of a 
collective bargaining agreement entered into between the trustee and 
the labor organization providing mutually satisfactory modifications, 
at any time after that collective bargaining agreement has been entered 
into, the labor organization may apply to the court for an order 
seeking an increase in the level of wages or benefits, or relief from 
working conditions, based upon changed circumstances. The court shall 
grant the request only if the increase or other relief is not 
inconsistent with the standard set forth in paragraph (2)(E).
    ``(e) During a period during which a collective bargaining 
agreement at issue under this section continues in effect, and if 
essential to the continuation of the business of the debtor or in order 
to avoid irreparable damage to the estate, the court, after notice and 
a hearing, may authorize the trustee to implement interim changes in 
the terms, conditions, wages, benefits, or work rules provided by the 
collective bargaining agreement. Any hearing under this subsection 
shall be scheduled in accordance with the needs of the trustee. The 
implementation of such interim changes shall not render the application 
for rejection moot.
    ``(f)(1) Rejection of a collective bargaining agreement constitutes 
a breach of the collective bargaining agreement, and shall be effective 
no earlier than the entry of an order granting such relief.
    ``(2) Notwithstanding paragraph (1), solely for purposes of 
determining and allowing a claim arising from the rejection of a 
collective bargaining agreement, rejection shall be treated as 
rejection of an executory contract under section 365(g) and shall be 
allowed or disallowed in accordance with section 502(g)(1). No claim 
for rejection damages shall be limited by section 502(b)(7). Economic 
self-help by a labor organization shall be permitted upon a court order 
granting a motion to reject a collective bargaining agreement under 
subsection (d) or pursuant to subsection (e), and no provision of this 
title or of any other provision of Federal or State law may be 
construed to the contrary.
    ``(g) The trustee shall provide for the reasonable fees and costs 
incurred by a labor organization under this section, upon request and 
after notice and a hearing.
    ``(h) A collective bargaining agreement that is assumed shall be 
assumed in accordance with section 365.''.

SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED EMPLOYEES.

    Section 1114 of title 11, United States Code, is amended--
            (1) in subsection (a), by inserting ``, without regard to 
        whether the debtor asserts a right to unilaterally modify such 
        payments under such plan, fund, or program'' before the period 
        at the end;
            (2) in subsection (b)(2), by inserting ``, and a labor 
        organization serving as the authorized representative under 
        subsection (c)(1),'' after ``section'';
            (3) by striking subsection (f) and inserting the following:
    ``(f)(1) If a trustee seeks modification of retiree benefits, the 
trustee shall provide a notice to the authorized representative that 
modifications are being proposed pursuant to this section, and shall 
promptly provide an initial proposal. Thereafter, the trustee shall 
confer in good faith with the authorized representative at reasonable 
times and for a reasonable period in light of the complexity of the 
case in attempting to reach mutually satisfactory modifications.
    ``(2) The initial proposal and subsequent proposals by the trustee 
shall be based upon a business plan for the reorganization of the 
debtor and shall reflect the most complete and reliable information 
available. The trustee shall provide to the authorized representative 
all information that is relevant for the negotiations. The court may 
enter a protective order to prevent the disclosure of information if 
disclosure could compromise the position of the debtor with respect to 
the competitors in the industry of the debtor, subject to the needs of 
the authorized representative to evaluate the proposals of the trustee 
and an application pursuant to subsection (g) or (h).
    ``(3) Modifications proposed by the trustee--
            ``(A) shall be proposed only as part of a program of 
        workforce and nonworkforce cost savings devised for the 
        reorganization of the debtor, including savings in management 
        personnel costs;
            ``(B) shall be limited to modifications that are designed 
        to achieve a specified aggregate financial contribution for the 
        retiree group represented by the authorized representative 
        (taking into consideration any cost savings implemented within 
        the 12-month period before the date of filing of the petition 
        with respect to the retiree group), and shall be no more than 
        the minimum savings essential to permit the debtor to exit 
        bankruptcy, such that confirmation of a plan of reorganization 
        is not likely to be followed by the liquidation, or the need 
        for further financial reorganization, of the debtor (or any 
        successor to the debtor) in the short term; and
            ``(C) shall not be disproportionate or overly burden the 
        retiree group, either in the amount of the cost savings sought 
        from such group or the nature of the modifications.'';
            (4) in subsection (g)--
                    (A) by striking the subsection designation and all 
                that follows through the semicolon at the end of 
                paragraph (3) and inserting the following:
    ``(g)(1) If, after a period of negotiations, the trustee and the 
authorized representative have not reached agreement over mutually 
satisfactory modifications and further negotiations are not likely to 
produce mutually satisfactory modifications, the trustee may file a 
motion seeking modifications in the payment of retiree benefits after 
notice and a hearing. Absent agreement of the parties, no such hearing 
shall be held before the expiration of the 21-day period beginning on 
the date on which notice of the hearing is provided to the authorized 
representative. Only the debtor and the authorized representative may 
appear and be heard at such hearing.
    ``(2) The court may grant a motion to modify the payment of retiree 
benefits only if, based on clear and convincing evidence--
            ``(A) the court finds that the trustee has complied with 
        the requirements of subsection (f);
            ``(B) the court has considered alternative proposals by the 
        authorized representative and has determined that such 
        proposals do not meet the requirements of subsection (f)(3)(B);
            ``(C) the court finds that further negotiations regarding 
        the proposal of the trustee or an alternative proposal by the 
        authorized representative are not likely to produce a mutually 
        satisfactory agreement;
            ``(D) the court finds that implementation of the proposal 
        shall not cause irreparable harm to the affected retirees; and
            ``(E) the court concludes that an order granting the motion 
        and immediate implementation of the proposal of the trustee is 
        essential to permit the debtor to exit bankruptcy, such that 
        confirmation of a plan of reorganization is not likely to be 
        followed by liquidation, or the need for further financial 
        reorganization, of the debtor (or a successor to the debtor) in 
        the short term.
    ``(3) If a trustee has implemented a program of incentive pay, 
bonuses, or other financial returns for insiders, senior executive 
officers, or the twenty next most highly compensated employees or 
consultants providing services to the debtor during the bankruptcy, or 
such a program was implemented within 180 days before the date of the 
filing of the petition, the court shall presume that the trustee has 
failed to satisfy the requirements of subparagraph (f)(3)(C).''; and
                    (B) in the matter following paragraph (3)--
                            (i) by striking ``except that in no case'' 
                        and inserting the following:
    ``(4) In no case''; and
                            (ii) by striking ``is consistent with the 
                        standard set forth in paragraph (3)'' and 
                        inserting ``assures that all creditors, the 
                        debtor, and all of the affected parties are 
                        treated fairly and equitably, and is clearly 
                        favored by the balance of the equities''; and
            (5) by striking subsection (k) and redesignating 
        subsections (l) and (m) as subsections (k) and (l), 
        respectively.

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

    Section 363(b) of title 11, United States Code, is amended by 
adding at the end the following:
    ``(3) In approving a sale under this subsection, the court shall 
consider the extent to which a bidder has offered to maintain existing 
jobs, preserve terms and conditions of employment, and assume or match 
pension and retiree health benefit obligations in determining whether 
an offer constitutes the highest or best offer for such property.''.

SEC. 204. CLAIM FOR PENSION LOSSES.

    Section 502 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(l) The court shall allow a claim asserted by an active or 
retired participant, or by a labor organization representing such 
participants, in a defined benefit plan terminated under section 4041 
or 4042 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1341, 1342), for any shortfall in pension benefits accrued as of 
the effective date of the termination of such pension plan as a result 
of the termination of the plan and limitations upon the payment of 
benefits imposed pursuant to section 4022 of that Act (29 U.S.C. 1342), 
notwithstanding any claim asserted and collected by the Pension Benefit 
Guaranty Corporation with respect to such termination.
    ``(m) The court shall allow a claim of a kind described in section 
101(5)(C) by an active or retired participant in a defined contribution 
plan (within the meaning of section 3(34) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(34))), or by a labor 
organization representing such participants. The amount of such claim 
shall be measured by the market value of the stock at the time of 
contribution to, or purchase by, the plan and the value as of the 
commencement of the case.''.

SEC. 205. PAYMENTS BY SECURED LENDER.

    Section 506(c) of title 11, United States Code, is amended by 
adding at the end the following: ``If employees have not received 
wages, accrued vacation, severance, or other benefits owed under the 
policies and practices of the debtor, or pursuant to the terms of a 
collective bargaining agreement, for services rendered on and after the 
date of the commencement of the case, such unpaid obligations shall be 
deemed necessary costs and expenses of preserving, or disposing of, 
property securing an allowed secured claim and shall be recovered even 
if the trustee has otherwise waived the provisions of this subsection 
under an agreement with the holder of the allowed secured claim or a 
successor or predecessor in interest.''.

SEC. 206. PRESERVATION OF JOBS AND BENEFITS.

    Chapter 11 of title 11, United States Code, is amended--
            (1) by inserting before section 1101 the following:
``Sec. 1100. Statement of purpose
    ``A debtor commencing a case under this chapter shall have as its 
principal purpose the reorganization of its business to preserve going 
concern value to the maximum extent possible through the productive use 
of its assets and the preservation of jobs that will sustain productive 
economic activity.'';
            (2) in section 1129--
                    (A) in subsection (a), as amended by section 104, 
                by adding at the end the following:
            ``(18) The debtor has demonstrated that the reorganization 
        preserves going concern value to the maximum extent possible 
        through the productive use of the assets of the debtor and 
        preserves jobs that sustain productive economic activity.''; 
        and
                    (B) in subsection (c)--
                            (i) by inserting ``(1)'' after ``(c)''; and
                            (ii) by striking the last sentence and 
                        inserting the following:
    ``(2) If the requirements of subsections (a) and (b) are met with 
respect to more than 1 plan, the court shall, in determining which plan 
to confirm--
            ``(A) consider the extent to which each plan would preserve 
        going concern value through the productive use of the assets of 
        the debtor and the preservation of jobs that sustain productive 
        economic activity; and
            ``(B) confirm the plan that better serves such interests.
    ``(3) A plan that incorporates the terms of a settlement with a 
labor organization representing employees of the debtor shall 
presumptively constitute the plan that satisfies this subsection.''; 
and
            (3) in the table of sections, by inserting before the item 
        relating to section 1101 the following:

``1100. Statement of purpose.''.

SEC. 207. TERMINATION OF EXCLUSIVITY.

    Section 1121(d) of title 11, United States Code, is amended by 
adding at the end the following:
    ``(3) For purposes of this subsection, cause for reducing the 120-
day period or the 180-day period includes--
            ``(A) the filing of a motion pursuant to section 1113 
        seeking rejection of a collective bargaining agreement if a 
        plan based upon an alternative proposal by the labor 
        organization is reasonably likely to be confirmed within a 
        reasonable time; and
            ``(B) the proposed filing of a plan by a proponent other 
        than the debtor, which incorporates the terms of a settlement 
        with a labor organization if such plan is reasonably likely to 
        be confirmed within a reasonable time.''.

SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY.

    Section 503(b) of title 11, United States Code, as amended by 
section 103 of this Act, is amended by adding at the end the following:
            ``(11) with respect to withdrawal liability owed to a 
        multiemployer pension plan for a complete or partial withdrawal 
        pursuant to section 4201 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1381) where such withdrawal 
        occurs on or after the commencement of the case, an amount 
        equal to the amount of vested benefits payable from such 
        pension plan that accrued as a result of employees' services 
        rendered to the debtor during the period beginning on the date 
        of commencement of the case and ending on the date of the 
        withdrawal from the plan.''.

         TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS

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 review under paragraph 
        (5), payments or other distributions under the plan to or for 
        the benefit of insiders, senior executive officers, and any of 
        the twenty next most highly compensated employees or 
        consultants 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 determines that such 
        payments are not excessive or disproportionate compared to 
        distributions to the nonmanagement workforce of the debtor.''; 
        and
            (2) in paragraph (5)--
                    (A) in subparagraph (A)(ii), by striking ``and'' at 
                the end;
                    (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(C) the compensation disclosed pursuant to subparagraph 
        (B) has been approved by, or is subject to the approval of, the 
        court as--
                    ``(i) reasonable when compared to individuals 
                holding comparable positions at comparable companies in 
                the same industry; and
                    ``(ii) not disproportionate in light of economic 
                concessions by the nonmanagement workforce of the 
                debtor during the case.''.

SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.

    Section 503(c) of title 11, United States Code, is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A)--
                    (A) by inserting ``, a senior executive officer, or 
                any of the twenty next most highly compensated 
                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 of the 
                commencement of the case,'' after ``remain with the 
                debtor's business,''; and
                    (C) by inserting ``clear and convincing'' before 
                ``evidence in the record''; and
            (2) by amending paragraph (3) to read as follows:
            ``(3) other transfers or obligations to or for the benefit 
        of insiders, senior executive officers, managers, or 
        consultants providing services to the debtor, in the absence of 
        a finding by the court, based upon clear and convincing 
        evidence, and without deference to the request of the debtor 
        for such payments, that such transfers or obligations are 
        essential to the survival of the business of the debtor or (in 
        the case of a liquidation of some or all of the assets of the 
        debtor) 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 provided, and then only 
        to the extent that the court finds such transfers or 
        obligations are reasonable compared to individuals holding 
        comparable positions at comparable companies in the same 
        industry and not disproportionate in light of economic 
        concessions by the nonmanagement workforce of the debtor during 
        the case.''.

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 employees of the debtor has been terminated 
pursuant to section 4041 or 4042 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1341, 1342), on or after the date of 
the commencement 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 benefits of active employees of the debtor, or reduced or 
eliminated health benefits for active or retired employees within 180 
days before the date of the commencement of the case.''.

SEC. 304. RECOVERY OF EXECUTIVE COMPENSATION.

    (a) In General.--Subchapter III of chapter 5 of 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 section 1113(d) or 
section 1114(g), by which the debtor reduces the cost of its 
obligations under a collective bargaining agreement or a plan, fund, or 
program for retiree benefits (as defined in section 1114(a)), the 
court, in granting relief, shall determine the percentage diminution in 
the value of the obligations when compared to the obligations of the 
debtor under the collective bargaining 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 determination, 
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 (29 U.S.C. 1341, 1342), 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 
payable under that 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 employer, has been terminated 
pursuant to section 4041 or 4042 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1341, 1342), 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 section 1113(d), 
or section 1114(g), the court, upon motion of a party in interest, 
shall determine the percentage diminution in the value of benefit 
obligations when compared to the total benefit liabilities before such 
termination. The court shall not take into account pension benefits 
paid or payable under title IV of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1301 et seq.) as a result of any such 
termination.
    ``(c) Upon the determination of the percentage diminution 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 
1114 or, if no such relief has been granted, the termination 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 committee 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 benefit of the estate. The 
costs of recovery shall be borne by the estate.
    ``(e) The court shall not award postpetition compensation under 
section 503(c) or otherwise to any person subject to subsection (c) of 
this section if there is a reasonable likelihood that such compensation 
is intended to reimburse or replace compensation recovered by the 
estate under this section.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 5 of title 11, United States Code, is amended by inserting 
after the item relating to section 562 the following:

``563. Recovery of executive compensation.''.

SEC. 305. PREFERENTIAL COMPENSATION TRANSFER.

    Section 547 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(j)(1) The trustee may avoid a transfer--
            ``(A) made--
                    ``(i) 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
                    ``(ii) in anticipation of bankruptcy to a 
                consultant who is formerly 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); and
            ``(B) made or incurred on or within 1 year before the 
        filing of the petition.
    ``(2) No provision of subsection (c) shall constitute a defense 
against the recovery of a transfer described in paragraph (1).
    ``(3) The trustee or a committee appointed pursuant to section 1102 
may commence an action to recover a transfer described in paragraph 
(1), except that, if neither the trustee nor such committee commences 
an action to recover the 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;
            (2) in paragraph (28), by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after paragraph (28) 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.''.
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