Protecting Employees and Retirees in Business Bankruptcies Act of 2014

Bill: 113-s-2589
Sponsor: full_name: Sen. Durbin, Richard J. [D-IL]
Introduced: 2014-07-10
Policy area: Finance and Financial Sector
Subjects: Bankruptcy

Corporate finance and management

Employee benefits and pensions

Health care costs and insurance

Labor-management relations

Securities

Unemployment

Wages and earnings
Latest action: action_date: 2014-07-10
text: Read twice and referred to the Committee on the Judiciary. (text of measure as introduced: CR S4410-4414)

Summaries:
action_date: 2014-07-10
action_desc: Introduced in Senate
text: <p>Protecting Employees and Retirees in Business Bankruptcies Act of 2014 - Amends federal bankruptcy law governing expenses and claims to increase to $20,000: (1) allowed unsecured claims in the fourth order of priority (wages, salaries, or commissions), and (2) the factor multiplied by the number of employees covered with respect to employee benefit plan contributions in the fifth order of priority.</p> <p>Includes within the scope of a claim in bankruptcy certain equity securities held in a defined contribution plan for the benefit of certain individuals, but only if an employer or plan sponsor who has commenced a case in bankruptcy has committed fraud regarding the plan or has otherwise breached a duty to the participant that has proximately caused the loss of value.</p> <p>Allows as an administrative expense of the estate: (1) severance pay owed to certain employees of the debtor for layoff or termination (which pay shall be deemed earned in full), and (2) damages as a result of violation of law by the debtor. </p> <p>Includes among prerequisites for confirmation of a business reorganization bankruptcy plan (Chapter 11) provision for: (1) recovery of damages payable for the rejection of a collective bargaining agreement, or other financial returns as negotiated by the debtor and the authorized representative; (2) continued payment of retiree benefits maintained or established by the debtor before the petition filing date if no modifications are made before confirmation of the plan; and (3) recovery of claims arising from the modification of retiree benefits or for certain financial returns, as negotiated by the debtor and the authorized representative.</p> <p>Revises requirements governing: (1) rejection of collective bargaining agreements; (2) payment of insurance benefits to retired employees, including benefit modifications proposed by the trustee; and (3) a trustee's administrative power to dispose of property. Requires the court, in approving a sale of business assets, to 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.</p> <p>Requires the bankruptcy court to allow certain claims asserted by an active or retired participant, or by a labor organization representing such participant, for any shortfall in pension benefits accrued as a result of the termination of the plan and limitations upon the payment of certain statutory benefits.</p> <p>States that, if employees have not received wages and benefits for services rendered on and after the date of the commencement of the case in bankruptcy, 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 certain provisions under an agreement with the holder of the allowed secured claim.</p> <p>Allows reduction of a debtor's time frame for filing a Chapter 11 bankruptcy plan in the event of: (1) the filing of a motion 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; or (2) 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.</p> <p>Modifies requirements for confirmation of a Chapter 11 bankruptcy plan to prohibit approval of: (1) payments or other distributions for the benefit of insiders, senior executive officers, and certain highly compensated employees or consultants providing services to the debtor, except as part of those generally applicable to the debtor's employees if the court determines that such payments are not excessive or disproportionate compared to distributions to the debtor's nonmanagement workforce; and (2) insider compensation unless approved by the court as reasonable according to specified criteria.</p> <p>Restricts: (1) certain executive compensation enhancements as part of the allowance of administrative expenses; (2) trustee assumption of certain deferred compensation arrangements for the benefit of insiders, senior executive officers, or certain highly compensated employees of the debtor; and (3) trustee assumption of retiree benefits for insiders, senior executive officers, or certain highly compensated employees of the debtor if the debtor has obtained relief to impose reductions in retiree benefits, or health benefits of active employees of the debtor, or has reduced or eliminated health benefits for active or retired employees within 180 days before the date of the commencement of the case. </p> <p>Allows as an administrative expense of a debtor's estate, with respect to withdrawal liability owed to a multiemployer pension plan for a complete or partial withdrawal under the Employee Retirement Income Security Act of 1974 (ERISA), an amount equal to the amount of vested benefits payable from the plan that accrued as a result of employees' services rendered to the debtor during the period between the commencement of the case and the date of the withdrawal from the plan.</p> <p>Requires the court, where a debtor has obtained relief by which it reduces the cost of its obligations under a collective bargaining agreement or a retiree plan, fund, or program of retiree benefits, to determine before granting relief the percentage diminution in the value of the obligations when compared to the debtor's obligations under the collective bargaining agreement, or with respect to retiree benefits.</p> <p>Authorizes the trustee in bankruptcy to avoid a transfer made or incurred, on or within one year before the filing of the petition for relief, in anticipation of bankruptcy to or for the benefit of an insider, including certain consultants who were formerly insiders and who are retained to provide services to an entity that becomes a debtor.</p> <p>Grants a labor organization creditor status for purposes of filing a proof of claim.</p> <p>Declares that the filing of a petition for relief does not operate as an automatic stay of the commencement or continuation of a dispute resolution proceeding established by a collective bargaining agreement that was or could have been commenced against the debtor before the filing of a petition, including payment or enforcement of an award or settlement under such proceeding.</p>

tv_txt: II 113th CONGRESS 2d Session S. 2589 IN THE SENATE OF THE UNITED STATES July 10, 2014 Mr. Durbin (for himself, Mr. Harkin , Mr. Whitehouse , Mr. Brown , and Mr. Franken ) 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.

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 2014 . (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. 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. I Improving Recoveries for Employees and Retirees 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, ; (2) in paragraph (5)(A), by striking— (A) within 180 days ; and (B) or the date of the cessation of the debtor’s business, whichever occurs first ; and (3) in paragraph (5), 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. . 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, 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 next most highly compensated employees of the debtor (if 1 or more are not insiders), if such 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, if 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. . 103. Priority for severance pay Section 503(b) of title 11, United States Code, is amended— (1) in paragraph (8), 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 . 104. Financial returns for employees and retirees Section 1129(a) of title 11, United States Code is amended— (1) 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). ; and (2) 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 its effective date 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). . 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 2901 of title 29, United States Code, 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; . II Reducing Employees’ and Retirees’ Losses 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, 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 agreement that modifications are being proposed under this section, and shall promptly provide an initial proposal for modifications to the 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 such 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 debtor’s position with respect to its competitors in the industry, subject to the needs of the labor organization to evaluate the trustee’s proposals and any application for rejection of the 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 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 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 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 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 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 paragraph (3)(B) of subsection (c); (C) the court finds that further negotiations regarding the trustee’s proposal or an alternative proposal by the labor organization are not likely to produce an agreement; (D) the court finds that implementation of the trustee’s proposal shall not— (i) cause a material diminution in the purchasing power of the employees covered by the agreement; (ii) adversely affect the ability of the debtor to retain an experienced and qualified workforce; or (iii) impair the debtor’s labor relations such that the ability to achieve a feasible reorganization would be compromised; and (E) the court concludes that rejection of the agreement and immediate implementation of the trustee’s proposal 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 20 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 an agreement entered into between the trustee and the labor organization providing mutually satisfactory modifications, at any time after such 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 in which a collective bargaining agreement at issue under this section continues in effect, and if essential to the continuation of the debtor’s business 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 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. . 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 after section the following: , and a labor organization serving as the authorized representative under subsection (c)(1), ; (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 debtor’s position with respect to its competitors in the industry, subject to the needs of the authorized representative to evaluate the trustee’s proposals 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 (g) 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 trustee’s proposal 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 trustee’s proposal 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 20 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) by striking except that in no case and inserting the following: (4) In no case ; and (5) by striking subsection (k) and redesignating subsections (l) and (m) as subsections (k) and (l), respectively. 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. . 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, 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 such Act, 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. . 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. . 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), 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 debtor’s assets and preserves jobs that sustain productive economic activity. ; (3) in section 1129(c)— (A) by inserting (1) after (c) ; and (B) 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 debtor’s assets 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 (4) in the table of sections, by inserting before the item relating to section 1101 the following: 1100. Statement of purpose. . 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 the following: (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. (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. . 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. . III Restricting Executive Compensation Programs 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 20 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 debtor’s nonmanagement workforce. ; 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 reasonable when compared to individuals holding comparable positions at comparable companies in the same industry and not disproportionate in light of economic concessions by the debtor’s nonmanagement workforce during the case. . 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 20 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 debtor’s request for such payments, that such transfers or obligations are essential to the survival of the debtor’s business or (in the case of a liquidation of some or all of the debtor’s assets) essential to the orderly liquidation and maximization of value of the assets of the debtor, in either case, because of the essential nature of the services 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 debtor’s nonmanagement workforce during the case. . 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 20 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, 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 20 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. . 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: 563. Recovery of executive compensation (a) If a debtor has obtained relief under subsection (d) of section 1113, or subsection (g) of section 1114, by which the debtor reduces the cost of its obligations under a collective bargaining agreement or a plan, fund, or 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 debtor’s obligations 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, 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 such Act as a result of any such termination. (b) If a defined benefit pension plan administered by the debtor, or for which the debtor is a contributing employer, has been terminated pursuant to section 4041 or 4042 of the Employee Retirement Income Security Act of 1974, effective at any time on or after 180 days before the date of the commencement of a case under this title, but a debtor has not obtained relief under subsection (d) of section 1113, or subsection (g) of section 1114, 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 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) 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. . 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 such transfer, except that, if neither the trustee nor such committee commences an action to recover such transfer by the time of the commencement of a hearing on the confirmation of a plan under section 1129, any party in interest may apply to the court for authority to recover the claims for the benefit of the estate. The costs of recovery shall be borne by the estate. . IV Other Provisions 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 . 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 adding at the end the following: (29) of the commencement or continuation of a grievance, arbitration, or similar dispute resolution proceeding established by a collective bargaining agreement that was or could have been commenced against the debtor before the filing of a case under this title, or the payment or enforcement of an award or settlement under such proceeding. .