119-s1381

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1381 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 1381

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

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 April 9, 2025

 Mr. Durbin (for himself, Mr. Hawley, Mr. Schatz, Ms. Duckworth, Ms. 
Klobuchar, and Mr. Whitehouse) introduced the following bill; which was 
 read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

 A BILL

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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Protecting 
Employees and Retirees in Business Bankruptcies Act of 2025''.

    (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.

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. Prohibition against special compensation payments.

Sec. 304. Assumption of executive benefit plans.

Sec. 305. Recovery of executive compensation.

Sec. 306. Preferential compensation transfer.
 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. These bankruptcies include 
 several of the largest business bankruptcy filings in history. 
 As the use of bankruptcy has expanded, job preservation and 
 retirement security are placed at greater risk.

    (2) Laws enacted to improve recoveries for employees and 
 retirees and limit their losses in bankruptcy cases have not 
 kept pace with the increasing and broader use of bankruptcy by 
 businesses in all sectors of the economy. However, while 
 protections for employees and retirees in bankruptcy cases have 
 eroded, management compensation plans devised for those in 
 charge of troubled businesses have become more prevalent and 
 are escaping adequate scrutiny.

    (3) Changes in the law regarding these matters are urgently 
 needed as bankruptcy is used to address increasingly more 
 complex and diverse conditions affecting troubled businesses 
 and industries.

 TITLE I--IMPROVING RECOVERIES FOR EMPLOYEES AND RETIREES

SEC. 101. INCREASED WAGE PRIORITY.

 

Section 507

    (a) of title 11, United States Code, is amended--

    (1) in paragraph

    (4) --
        (A) by 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.''.

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, and'' before ``wages and benefits'' each 
place that term appears.

 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. 1322), 
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:
``

Sec. 1100. Statement of purpose
 ``A case under this chapter involving a debtor that is not an 
individual 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 of 
 this Act, by adding at the end the following:
 ``

    (18) If the plan contemplates continuation of the 
 debtor's business, the proponent of the plan has demonstrated 
 that the reorganization preserves going concern value to the 
 maximum extent possible through the productive use of the 
 assets of the debtor and preserves jobs that sustain productive 
 economic activity.''; and
        (B) in subsection
            (c) --
            (i) by inserting ``

    (1) '' after ``
            (c) ''; and
            (ii) by striking the last sentence and 
 inserting the following:
 ``

    (2) If the requirements of subsections

    (a) and

    (b) are met with 
respect to more than 1 plan, the court shall, in determining which plan 
to confirm--
 ``
        (A) consider the extent to which each plan would preserve 
 going concern value through the productive use of the assets of 
 the debtor and the preservation of jobs that sustain productive 
 economic activity; and
 ``
        (B) confirm the plan that better serves such interests.
 ``

    (3) A plan that incorporates the terms of a settlement with a 
labor organization representing employees of the debtor shall 
presumptively constitute the plan that satisfies this subsection.''; 
and

    (3) in the table of sections, by inserting before the item 
 relating to 

section 1101 the following:

``1100. Statement of purpose.''.

SEC. 207. TERMINATION OF EXCLUSIVITY.

 

Section 1121
            (d) of title 11, United States Code, is amended by 
adding at the end the following:
 ``

    (3) For purposes of this subsection, cause for reducing the 120-
day period or the 180-day period includes--
 ``
        (A) the filing of a motion pursuant to 

section 1113 
 seeking rejection of a collective bargaining agreement if a 
 plan based upon an alternative proposal by the labor 
 organization is reasonably likely to be confirmed within a 
 reasonable time; and
 ``
        (B) the proposed filing of a plan by a proponent other 
 than the debtor, which incorporates the terms of a settlement 
 with a labor organization if such plan is reasonably likely to 
 be confirmed within a reasonable time.''.

SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY.

 

Section 503

    (b) of title 11, United States Code, as amended by 

section 103 of this Act, is amended by adding at the end the following:
 ``

    (12) with respect to withdrawal liability owed to a 
 multi-employer 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 total benefits payable from such pension 
 plan that accrued as a result of employees' services rendered 
 to the debtor during the period beginning on the date of 
 commencement of the case and ending on the date of the 
 withdrawal from the plan.''.

 TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS

SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM BANKRUPTCY.

 

Section 1129

    (a) of title 11, United States Code, as amended by 
sections 104 and 206 of this Act, 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; and
 ``
            (ii) 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) ; and
        (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, as amended by 

section 203 of this Act, 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:
``

Sec. 563. Recovery of executive compensation
 ``

    (a) If a debtor has obtained relief under 

section 1113
            (d) or 

section 1114

    (g) , by which the debtor reduces the cost of its 
obligations under a collective bargaining agreement or a plan, fund, or 
program for retiree benefits (as defined in 

section 1114

    (a) ), the 
court, in granting relief, shall determine the percentage diminution in 
the value of the obligations when compared to the obligations of the 
debtor under the collective bargaining agreement, or with respect to 
retiree benefits, as of the date of the commencement of the case under 
this title before granting such relief. In making its determination, 
the court shall include reductions in benefits, if any, as a result of 
the termination pursuant to 

section 4041 or 4042 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1341, 1342), of a 
defined benefit plan administered by the debtor, or for which the 
debtor is a contributing employer, effective at any time on or after 
180 days before the date of the commencement of a case under this 
title. The court shall not take into account pension benefits paid or 
payable under that Act as a result of any such termination.
 ``

    (b) If a defined benefit pension plan administered by the debtor, 
or for which the debtor is a contributing employer, has been terminated 
pursuant to 

section 4041 or 4042 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1341, 1342), effective at any time on 
or after 180 days before the date of the commencement of a case under 
this title, but a debtor has not obtained relief under 

section 1113
            (d) , 
or 

section 1114

    (g) , the court, upon motion of a party in interest, 
shall determine the percentage diminution in the value of benefit 
obligations when compared to the total benefit liabilities before such 
termination. The court shall not take into account pension benefits 
paid or payable under title IV of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1301 et seq.) as a result of any such 
termination.
 ``
            (c) Upon the determination of the percentage diminution in value 
under subsection

    (a) or

    (b) , the estate shall have a claim for the 
return of the same percentage of the compensation paid, directly or 
indirectly (including any transfer to a self-settled trust or similar 
device, or to a nonqualified deferred compensation plan under 

section 409A
            (d) (1) of the Internal Revenue Code of 1986) to any officer of the 
debtor serving as member of the board of directors of the debtor within 
the year before the date of the commencement of the case, and any 
individual serving as chairman or lead director of the board of 
directors at the time of the granting of relief under 

section 1113 or 
1114 or, if no such relief has been granted, the termination of the 
defined benefit plan.
 ``
            (d) The trustee or a committee appointed pursuant to 

section 1102 
may commence an action to recover such claims, except that if neither 
the trustee nor such committee commences an action to recover such 
claim by the first date set for the hearing on the confirmation of plan 
under 

section 1129, any party in interest may apply to the court for 
authority to recover such claim for the benefit of the estate. The 
costs of recovery shall be borne by the estate.
 ``

    (e) The court shall not award postpetition compensation under 

section 503
            (c) or otherwise to any person subject to subsection
            (c) of 
this section if there is a reasonable likelihood that such compensation 
is intended to reimburse or replace compensation recovered by the 
estate under this section.''.

    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 5 of title 11, United States Code, is amended by inserting 
after the item relating to 

section 562 the following:

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

SEC. 306. 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, based on reasonable due diligence in the 
circumstances of the case, avoid a transfer--
 ``
        (A) made--
 ``
            (i) to, or for the benefit of, an insider of the 
 debtor (including an obligation incurred for the 
 benefit of an insider under an employment contract), 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 made in anticipation 
 of bankruptcy; or
 ``
            (ii) in anticipation of bankruptcy to a 
 consultant who is formerly an insider and who is 
 retained to provide services to an entity that becomes 
 a debtor (including an obligation under a contract to 
 provide services to such entity or to a debtor); and
 ``
        (B) made or incurred on or within 1 year before the 
 filing of the petition.
 ``

    (2) No provision of subsection
            (c) shall constitute a defense 
against the recovery of a transfer described in paragraph

    (1) .
 ``

    (3) The trustee or a committee appointed pursuant to 

section 1102 
may commence an action to recover a transfer described in paragraph

    (1) , except that, if neither the trustee nor such committee commences 
an action to recover the transfer by the time of the commencement of a 
hearing on the confirmation of a plan under 

section 1129, any party in 
interest may apply to the court for authority to recover the claims for 
the benefit of the estate. The costs of recovery shall be borne by the 
estate.''.

 TITLE IV--OTHER PROVISIONS

SEC. 401. UNION PROOF OF CLAIM.

 

Section 501

    (a) of title 11, United States Code, is amended by 
inserting ``, including a labor organization,'' after ``A creditor''.

SEC. 402. EXCEPTION FROM AUTOMATIC STAY.

 

Section 362

    (b) of title 11, United States Code, is amended--

    (1) in paragraph

    (28) , by striking ``and'' at the end;

    (2) in paragraph

    (29) , by striking the period at the end 
 and inserting ``; and''; and

    (3) by inserting after paragraph

    (29) the following:
 ``

    (30) 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).''.
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