Title: Protecting Employees and Retirees in Business Bankruptcies Act of 2020
Policy area: Finance and Financial Sector

Summary:
Protecting Employees and Retirees in Business Bankruptcies Act of 2020
This bill modifies provisions related to Chapter 11 bankruptcy, which typically involves the reorganization of a debtor company's assets and debts. Specifically, the bill (1) expands available claims and priorities for employees and retirees, and (2) places additional restrictions on the compensation of executives and other high level employees.
With respect to employee and retiree recoveries and losses, the bill
With respect to executive compensation, the bill

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7370 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 7370

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 2020

Mr. Nadler (for himself, Mr. Norcross, Mr. Cicilline, Mrs. Demings, Mr. 
Johnson of Georgia, Ms. Jayapal, Ms. Scanlon, Ms. Dean, and Ms. Garcia 
  of Texas) introduced the following bill; which was 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 2020''.
    (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 and contributions to employee 
                            benefit plans.
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.
         TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS

Sec. 301. Executive compensation upon exit from bankruptcy.
Sec. 302. Limitations on executive compensation enhancements.
Sec. 303. Prohibition against special compensation payments.
Sec. 304. Assumption of executive benefit plans.
Sec. 305. Recovery of executive compensation.
                       TITLE IV--OTHER PROVISIONS

Sec. 401. Union proof of claim.
Sec. 402. Exception from automatic stay.
Sec. 403. Effect on collective bargaining agreements under the Railway 
                            Labor Act.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Business bankruptcies have increased sharply in recent 
        years and remain at high levels due to the impact of the COVID-
        19 pandemic. 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 redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively;
                    (B) in the matter preceding clause (i), as so 
                redesignated, by inserting ``(A)'' before ``Fourth'';
                    (C) in subparagraph (A), as so designated, in the 
                matter preceding clause (i), as so redesignated--
                            (i) by striking ``$10,000'' and inserting 
                        ``$20,000'';
                            (ii) by striking ``within 180 days''; and
                            (iii) by striking ``or the date of the 
                        cessation of the debtor's business, whichever 
                        occurs first,''; and
                    (D) by adding at the end the following:
                    ``(B) Severance pay described in subparagraph 
                (A)(i) shall be deemed earned in full upon the layoff 
                or termination of employment of the individual to whom 
                the severance is owed.''; 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 20 highest compensated employees 
                        of the debtor who are not insiders or senior 
                        executive officers;
                            ``(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 AND CONTRIBUTIONS TO EMPLOYEE 
              BENEFIT PLANS.

    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 of the debtor, a senior executive officer of 
        the debtor, the 20 highest compensated employees of the debtor 
        who are not insiders or senior executive officers, any 
        department or division manager of the debtor, or any consultant 
        providing 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
            ``(11) any contribution to an employee benefit plan that is 
        due on or after the date of the filing of the petition; 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 by inserting ``any back pay, civil penalty, or damages for a 
violation of any Federal or State labor and employment law, including 
the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2101 
et seq.) and any comparable State law,'' before ``wages and benefits''.

           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 as provided in section 103(m) 
for collective bargaining agreements covered by 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, during the bankruptcy, the trustee has implemented a 
program of incentive pay, bonuses, or other financial returns for an 
insider of the debtor, a senior executive officer of the debtor, any of 
the 20 highest compensated employees of the debtor who are not insiders 
or senior executive officers, any department or division manager of the 
debtor, or any consultant providing services to the debtor, 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 a motion 
for rejection of the collective bargaining agreement has been filed, 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 and may be authorized for not more than 14 days in 
total.
    ``(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, during the bankruptcy, a trustee has implemented a 
program of incentive pay, bonuses, or other financial returns for 
insiders of the debtor, senior executive officers of the debtor, the 20 
highest compensated employees of the debtor who are not insiders or 
senior executive officers, any department or division managers of the 
debtor, or any consultants providing services to the debtor, 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 (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'';
            (5) in subsection (h)(1), by inserting ``for a period of 
        not longer than 14 days'' before the period; and
            (6) 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.

    (a) Requirement To Preserve Jobs and Maintain Terms and Conditions 
of Employment.--Section 363 of title 11, United States Code, is amended 
by adding at the end the following:
    ``(q)(1) In approving a sale or lease of property of the estate 
under this section or a plan under chapter 11, the court shall give 
substantial weight to the extent to which a prospective purchaser or 
lessee of the property will--
            ``(A) preserve the jobs of the employees of the debtor;
            ``(B) maintain the terms and conditions of employment of 
        the employees of the debtor; and
            ``(C) assume or match the pension and health benefit 
        obligations of the debtor to the retirees of the debtor.
    ``(2) If there are two or more offers to purchase or lease property 
of the estate under this section or a plan under chapter 11, the court 
shall approve the offer of the prospective purchaser or lessee that 
will best carry out the actions described in subparagraphs (A) through 
(C) of paragraph (1).''.
    (b) Chapter 11 Plans.--Section 1129(a) of title 11, United States 
Code is amended by adding at the end the following:
            ``(17) If the plan provides for the sale of all or 
        substantially all of the property of the estate, the plan 
        requires the purchaser of the sale to carry out the actions 
        described in subparagraphs (A) through (C) of section 
        363(q)(1).''.

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--
            (1) by adding ``(1)'' after ``(c)''; and
            (2) by adding at the end the following:
            ``(2) If one or more employees of the debtor have not 
        received wages, accrued vacation, severance, or any other 
        compensation owed under a plan, program, policy or practice of 
        the debtor, or pursuant to the terms of a collective bargaining 
        agreement, for services rendered on or after the date of the 
        commencement of the case, or the debtor has not made a 
        contribution due under an employee benefit plan on or after the 
        date of the commencement of the case, such unpaid obligations 
        shall be deemed reasonable, necessary costs and expenses of 
        preserving, or disposing of, property securing an allowed 
        secured claim and benefitting the holder of the allowed secured 
        claim, and shall be recovered by the trustee for payment to the 
        employees or the employee benefit plan, as applicable, even if 
        the trustee, or a successor or predecessor in interest 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: ``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.''.

         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)--
                    (A) by adding ``(A)'' after ``(4)'';
                    (B) in subparagraph (A), as so designated, by 
                striking ``Any payment'' and inserting ``Subject to 
                subparagraph (B), any payment''; and
                    (C) by adding at the end the following:
                    ``(B)(i) Subject to clause (ii), the plan does not 
                provide for payments or other distributions to, or for 
                the benefit of, an insider of the debtor, a senior 
                executive officer of the debtor, any of the 20 highest 
                compensated employees of the debtor who are not 
                insiders or senior executive officers, any department 
                or division manager of the debtor, or any consultant 
                providing services to the debtor, unless--
                            ``(I) the payments or other distributions 
                        are part of a program that is generally 
                        applicable to all full-time employees of the 
                        debtor; and
                            ``(II) the payments or distributions do not 
                        exceed the compensation limits established in 
                        section 503(c)(1) in comparison to the 
                        nonmanagement workforce of the debtor.
                    ``(ii) The requirement under clause (i) shall not 
                apply to the compensation described in paragraph 
                (5)(C).''; 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 under 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 as 
                        the debtor;
                            ``(ii) not more than the amount 
                        corresponding to the 50th percentile of the 
                        compensation of the individuals described in 
                        clause (i); and
                            ``(iii) not excessive or disproportionate 
                        in light of economic losses of the 
                        nonmanagement workforce of the debtor.''.

SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.

    Section 503(c) of title 11, United States Code, is amended--
            (1) In the matter preceding paragraph (1), by inserting 
        ``and subject to section 363(b)(3)'' after ``subsection (b)'';
            (2) in paragraph (1)--
                    (A) in the matter preceding subparagraph (A)--
                            (i) by inserting ``, a senior executive 
                        officer of the debtor, any the 20 highest 
                        compensated employees of the debtor who are not 
                        insiders or senior executive officers, any 
                        department or division manager of the debtor, 
                        or any consultant providing services to the 
                        debtor'' before ``for the purpose''; and
                            (ii) 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,'';
                    (B) by amending subparagraph (A) to read as 
                follows:
                    ``(A) the transfer or obligation is part of a 
                program that is generally applicable to all full-time 
                employees of the debtor; and'';
                    (C) by striking subparagraph (B);
                    (D) by redesignating subparagraph (C) as 
                subparagraph (B);
                    (E) in subparagraph (B), as so redesignated--
                            (i) in clause (i), by striking ``10'' and 
                        inserting ``2''; and
                            (ii) in clause (ii)--
                                    (I) by striking ``25'' and 
                                inserting ``10''; and
                                    (II) by striking ``insider'' and 
                                inserting ``person'';
            (3) in paragraph (2)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, a senior executive officer of the debtor, 
                any of the 20 highest compensated employees of the 
                debtor who are not insiders or senior executive 
                officers, any department or division manager of the 
                debtor, or any consultant providing services to the 
                debtor,'' before ``, unless''; and
                    (B) in subparagraph (B), by striking ``10'' and 
                inserting ``2''; and
            (4) by amending paragraph (3) to read as follows:
            ``(3) other transfers or obligations to, or for the benefit 
        of, an insider of the debtor, a senior executive officer of the 
        debtor, the 20 highest compensated employees of the debtor who 
        are not insiders or senior executive officers, any department 
        or division manager of the debtor, or any consultant providing 
        services to the debtor that are outside of the ordinary course 
        of business, except as part of a plan of reorganization and 
        subject to the approval of the court under paragraphs (4) and 
        (5) of section 1129(a).''.

SEC. 303. PROHIBITION AGAINST SPECIAL COMPENSATION PAYMENTS.

    Section 363 of title 11, United States Code, is amended--
            (1) in subsection (b), by adding at the end the following:
            ``(3) No plan, program, or other transfer or obligation to, 
        or for the benefit of, an insider of the debtor, a senior 
        executive officer of the debtor, the 20 highest compensated 
        employees of the debtor who are not insiders or senior 
        executive officers, any department or division manager of the 
        debtor, or any consultant providing services to the debtor 
        shall be approved if the debtor has, on or after the date that 
        is 1 year before the date of the filing of the petition--
                    ``(A) discontinued any plan, program, policy, or 
                practice of paying severance pay to the nonmanagement 
                workforce of the debtor; or
                    ``(B) modified any plan, program, policy, or 
                practice described in subparagraph (A) in order to 
                reduce benefits under the plan, program, policy, or 
                practice.''; and
            (2) in subsection (c)--
                    (A) in paragraph (1), by striking ``If the 
                business'' and inserting ``Except as provided in 
                paragraph (5), if the business''; and
                    (B) by adding at the end the following:
            ``(5) In the case of a transaction that is a transfer or 
        obligation described in paragraphs (1) through (3) of section 
        503(c), the trustee shall obtain the prior approval of the 
        court after notice and an opportunity for a hearing.''.

SEC. 304. 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 an 
insider of the debtor, a senior executive officer of the debtor, or any 
of the 20 highest compensated employees of the debtor who are not 
insiders or senior executive officers 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 that is 1 year 
before the date of the commencement of the case.
    ``(r) No plan, fund, program, or contract to provide retiree 
benefits for insiders of the debtor, senior executive officers of the 
debtor, or the 20 highest compensated employees of the debtor who are 
not insiders or senior executive officers 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 has otherwise reduced or eliminated health 
benefits for employees or retirees of the debtor on are after the date 
that is 1 year before the date of the commencement of the case.''.

SEC. 305. 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:

``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.''.

                       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.''.

SEC. 403. EFFECT ON COLLECTIVE BARGAINING AGREEMENTS UNDER THE RAILWAY 
              LABOR ACT.

    Section 103 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(m) Notwithstanding sections 365, 1113, or 1114, neither the 
court nor the trustee may change the wages, working conditions, or 
retirement benefits of an employee or a retiree of the debtor 
established by a collective bargaining agreement that is subject to the 
Railway Labor Act (45 U.S.C. 151 et seq.), except in accordance with 
section 6 of that Act (45 U.S.C. 156).''.
                                 <all>