[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2418 Introduced in Senate (IS)]
113th CONGRESS
2d Session
S. 2418
To amend title 11 and title 29, United States Code, to increase the
amount of unsecured claims for salaries and wages given priority in
bankruptcy, to provide for payments to retirees to compensate for lost
health insurance benefits resulting from the bankruptcy of their former
employer, to protect the health benefits of employees and retirees, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 3, 2014
Mr. Rockefeller (for himself and Ms. Warren) introduced the following
bill; which was read twice and referred to the Committee on the
Judiciary
_______________________________________________________________________
A BILL
To amend title 11 and title 29, United States Code, to increase the
amount of unsecured claims for salaries and wages given priority in
bankruptcy, to provide for payments to retirees to compensate for lost
health insurance benefits resulting from the bankruptcy of their former
employer, to protect the health benefits of employees and retirees, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Bankruptcy
Fairness and Employee Benefits Protection Act of 2014''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title.
TITLE I--FAIRNESS FOR EMPLOYEES AND RETIREES IN CORPORATE BANKRUPTCIES
Sec. 101. Prohibition of unfair reductions to employee and retiree
benefits.
Sec. 102. Payment of insurance benefits to retirees.
Sec. 103. Fair treatment of compensation.
Sec. 104. Venue; change of venue.
Sec. 105. Protection of benefits in chapter 9 bankruptcy.
Sec. 106. Requirement to make pension contributions.
TITLE II--PROTECTION OF EMPLOYEE AND RETIREE HEALTH BENEFITS
Sec. 201. Notification of extent to which health benefits can be
modified or terminated.
Sec. 202. Protection of retirees under certain collectively bargained
agreements.
Sec. 203. Comptroller General report.
TITLE I--FAIRNESS FOR EMPLOYEES AND RETIREES IN CORPORATE BANKRUPTCIES
SEC. 101. PROHIBITION OF UNFAIR REDUCTIONS TO EMPLOYEE AND RETIREE
BENEFITS.
(a) Collective Bargaining Agreements.--Section 1113 of title 11,
United States Code, is amended--
(1) in subsection (b)--
(A) in paragraph (1)(A), by striking ``necessary
modifications in the employees benefits and protections
that are necessary to permit the reorganization of the
debtor'' and insert ``minimum modifications in the
employees benefits and protections that are necessary
to prevent the liquidation of the debtor''; and
(B) by adding at the end the following:
``(3)(A) If the proposal made under paragraph (1) provides
for a modification of the health insurance benefits of
employees of the debtor, the proposal shall provide for a
modification of the health insurance benefits of officers and
directors of the debtor--
``(i) to, at a minimum, be comparable to the
modification of health insurance benefits of employees
of the debtor; and
``(ii) such that the health insurance benefits of
officers and directors are not more generous than those
of employees of the debtor.
``(B) If the proposal made under paragraph (1) provides for
a modification of any benefit of employees of the debtor other
than health insurance benefits, including wages and pension
benefits, the proposal shall provide for a modification of such
benefit of officers and directors of the debtor that is, at a
minimum, in an amount equal to the percentage by which such
benefit of employees of the debtor was modified.'';
(2) in subsection (c)--
(A) in paragraph (1), by striking ``subsection
(b)(1)'' and inserting ``paragraphs (1) and (3) of
subsection (b)'';
(B) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively; and
(C) by inserting after paragraph (1) the following:
``(2) the debtor established by clear and convincing
evidence that any modification of the benefits and protections
of an employee of the debtor proposed under subsection (b)(1)
is the minimum modification necessary to prevent the
liquidation of the debtor;''; and
(3) by adding at the end the following:
``(g) The rejection of a collective bargaining agreement under this
section constitutes a breach of the agreement, and shall entitle
employees of the debtor to a claim for damages.''.
(b) Health Insurance Benefits of Retired Employees.--Section 1114
of title 11, United States Code, is amended--
(1) in subsection (f)--
(A) in paragraph (1)(A), by striking ``necessary
modifications in the retiree benefits that are
necessary to permit the reorganization of the debtor''
and insert ``minimum modifications in the retiree
benefits that are necessary to prevent the liquidation
of the debtor''; and
(B) by adding at the end the following:
``(3) If the proposal made under paragraph (1) provides for a
modification of the health insurance benefits of retired employees of
the debtor, the proposal shall provide for a modification of the health
insurance benefits of officers and directors of the debtor--
``(A) to, at a minimum, be comparable to the modification
of health insurance benefits of retired employees of the
debtor; and
``(B) such that the health insurance benefits of officers
and directors are not more generous than those of retired
employees of the debtor.''; and
(2) in subsection (g)(3), by striking ``necessary to permit
the reorganization of the debtor'' and insert ``the minimum
modification necessary to prevent the liquidation of the
debtor''.
SEC. 102. PAYMENT OF INSURANCE BENEFITS TO RETIREES.
(a) In General.--Section 1114(j) of title 11, United States Code,
is amended to read as follows:
``(j)(1) No claim for retiree benefits shall be limited by section
502(b)(7).
``(2)(A) A retired employee whose retiree benefits are modified
under subsection (e)(1) or (g) shall have a claim in an amount equal to
the value of the retiree benefits lost as a result of the modification,
which shall be reduced by the amount paid by a debtor under
subparagraph (B).
``(B)(i) In accordance with section 1129(a)(13)(B), a debtor shall
pay a retired employee with a claim under subparagraph (A)--
``(I) cash in an amount equal to the 2-year cost of
premiums for continuation coverage (as defined in section 602
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1162)) for the retired employee under section 602(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1162(3)); or
``(II) if the retired employee is not eligible for
continuation coverage, cash in an amount equal to the 2-year
cost of premiums for a comparable health insurance plan offered
through a State Exchange, Federally Facilitated Exchange, or
Federal-State Partnership Exchange established under the
Patient Protection and Affordable Care Act (42 U.S.C. 18001 et
seq.).
``(ii) Notwithstanding clause (i), if the court determines it to be
in the interest of fairness and equity, the court may require a debtor
to pay a retired employee with a claim under subparagraph (A) cash in
an amount equal to the cost of premiums for continuation coverage under
clause (i)(I) or for a comparable health insurance plan under clause
(i)(II) for a period of more than 2 years.
``(iii) The amount paid by a debtor under this subparagraph shall
not exceed the amount of the claim under subparagraph (A).
``(C) Any amount of the claim under subparagraph (A) that is not
paid under subparagraph (B) shall be a general unsecured claim.''.
(b) Confirmation of Plan.--Section 1129(a)(13) of title 11, United
States Code, is amended to read as follows:
``(13) The plan provides--
``(A) for the continuation, after the effective
date of the plan, of the payment of all retiree
benefits (as defined in section 1114(a)), at the level
established pursuant to subsection (e)(1) or (g) of
section 1114, at any time before the confirmation of
the plan, for the duration of the period the debtor has
obligated itself to provide such benefits; and
``(B) that the holder of a claim under section
1114(j)(2)(A) shall receive from the debtor, on the
effective date of the plan, cash equal to the amount
calculated under section 1114(j)(2)(B).''.
SEC. 103. FAIR TREATMENT OF COMPENSATION.
(a) Prohibition of Bonus Payments.--Section 503(c) of title 11,
United States Code, is amended--
(1) in paragraph (2)(B), by striking ``or'' at the end;
(2) by redesignating paragraph (3) as paragraph (4); and
(3) by inserting after paragraph (2) the following:
``(3) a bonus payment to an insider of the debtor,
including an incentive-based bonus payment; or''.
(b) Increased Priority Claim Amount for Employee Wages and
Benefits.--Section 507(a) of title 11, United States Code, is amended--
(1) in paragraph (4)--
(A) by striking ``$10,000'' and inserting
``$25,000''; and
(B) by striking ``180 days'' and inserting ``1
year''; and
(2) in paragraph (5)--
(A) in subparagraph (A), by striking ``180 days''
and inserting ``1 year''; and
(B) in subparagraph (B)(i), by striking ``$10,000''
and inserting ``$25,000''.
(c) Recovery of Excess Compensation.--Section 547 of title 11,
United States Code, is amended by adding at the end the following:
``(j) The court, upon motion of a party in interest, may prohibit a
transfer of compensation made to an insider of the debtor within 1 year
before the date on which the petition is filed if the court finds,
after notice and hearing, that the transfer--
``(1) was not made in the ordinary course of business; or
``(2) resulted in unjust enrichment.''.
SEC. 104. VENUE; CHANGE OF VENUE.
Chapter 87 of title 28, United States Code, is amended--
(1) by amending section 1408 to read as follows:
``Sec. 1408. Venue of cases under title 11
``Except as provided in section 1410, a case under title 11 shall
be commenced in the district court for the district in which the
largest share of employees, retired employees, physical assets, and
operations of the person or entity that is the subject of the case were
located in the year immediately preceding the commencement of the
case.''; and
(2) in section 1412, by striking ``to a district court for
another district'' and inserting ``to the district court for
the district in which the principal place of business in the
United States of the person or entity that is the subject of
the case was located in the year immediately preceding the
commencement of the case''.
SEC. 105. PROTECTION OF BENEFITS IN CHAPTER 9 BANKRUPTCY.
Section 901(a) of title 11, United States Code, is amended--
(1) by inserting ``507(a)(4), 507(a)(5),'' after
``507(a)(2)'';
(2) by inserting ``1113, 1114,'' after ``1111(b)''; and
(3) by inserting ``1129(a)(13),'' after ``1129(a)(10)''.
SEC. 106. REQUIREMENT TO MAKE PENSION CONTRIBUTIONS.
(a) Requirement To Pay Minimum Funding Contributions.--Subchapter I
of chapter 11 of title 11, United States Code, is amended by adding at
the end the following:
``Sec. 1117. Duty of debtor in possession to make required pension
contributions
``(a) Definitions.--In this section--
``(1) the term `pension plan' has the meaning given that
term under section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002); and
``(2) the term `required pension contributions' means
contributions necessary to satisfy the minimum funding
standards under sections 412 and 430 of the Internal Revenue
Code of 1986 and sections 302 and 303 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082 and
1083), including any required installment contributions.
``(b) Requirement.--A debtor in possession that sponsors a pension
plan or is a member of the controlled group with respect to such a
plan, or the trustee of the debtor in possession, shall--
``(1) make all required pension contributions to the
pension plan that become due after the filing of the petition;
and
``(2) make such contributions on or before the due dates
specified in section 430(j) of the Internal Revenue Code and
section 303(j) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1083(j)).''.
(b) Treatment as Administrative Expenses.--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 at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(10) any required pension contributions under section
1117 due to be made after the filing of the petition that are
unpaid.''.
(c) Perfection of Statutory Liens for Missed Pension
Contributions.--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) under subsection (a), of any act to perfect, or to
maintain or continue the perfection of, a statutory lien
imposed by section 430(k) of the Internal Revenue Code of 1986
or section 303(k) of the Employee Retirement Income Security
Act (29 U.S.C. 1083(k)) (which shall not be voidable under
section 545 of this title), for failure to make contribution
payments required under those sections, without regard to
whether such contributions became due or whether such lien
arose before or after the filing of the petition.''.
TITLE II--PROTECTION OF EMPLOYEE AND RETIREE HEALTH BENEFITS
SEC. 201. NOTIFICATION OF EXTENT TO WHICH HEALTH BENEFITS CAN BE
MODIFIED OR TERMINATED.
(a) Inclusion in Summary Plan Description.--Section 102(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1022) is
amended by inserting ``; in the case of a group health plan (as so
defined), whether the provisions of the plan permit the plan sponsor or
any employer participating in the plan to unilaterally modify or
terminate the benefits under the plan with respect to employees,
retired employees, and beneficiaries, and when and to what extent
benefits under the plan are fully vested with respect to employees,
retired employees, and beneficiaries'' after ``the name and address of
such issuer''.
(b) Presumption That Retired Employee Health Benefits Cannot Be
Modified or Terminated.--Section 502 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end
the following new subsection:
``(n) In the case of a suit brought under this title by a
participant or beneficiary relating to benefits of a retired employee
or the dependents of a retired employee under a group health plan (as
defined in section 733(a)(1)), the presumption for purposes of such
suit shall be that as of the date an employee retires or completes 20
years of service with the employer, benefits available under the plan
during retirement of the employee are fully vested and cannot be
modified or terminated for the life of the employee or, if longer, the
life of the employee's spouse. This presumption can be overcome only
upon a showing, by clear and convincing evidence, that the terms of the
group health plan allow for a modification or termination of benefits
available under the plan and that the employee, prior to becoming a
participant in the plan, was made aware, in clear and unambiguous
terms, that the plan allowed for such modification or termination of
benefits.''.
SEC. 202. PROTECTION OF RETIREES UNDER CERTAIN COLLECTIVELY BARGAINED
AGREEMENTS.
Section 8 of the National Labor Relations Act (29 U.S.C. 158) is
amended by adding at the end the following:
``(h) It shall be an unfair labor practice for any labor
organization and any employer to enter into any contract or agreement,
express or implied, whereby the organization and employer agree to
modify the terms of any previous agreement in a manner that would
result in a reduction or termination of retiree health insurance
benefits provided to an employee or a dependent of an employee under
the previous agreement, if such modification of the terms of the
previous agreement occurs after the date on which the employee
retires.''.
SEC. 203. COMPTROLLER GENERAL REPORT.
(a) In General.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General of the United States
shall submit to Congress a report on the strategies that corporations
use to avoid obligations to pay promised employee and retiree benefits.
(b) Contents.--The report under subsection (a) shall include a
discussion of--
(1) the use of spin-offs, mergers, subsidiaries,
bankruptcies, asset sales, and other strategies to avoid
obligations to pay promised employee and retiree benefits;
(2) the impact of such avoidance on the financial,
physical, and mental well-being of employees and retirees;
(3) the impact on Federal and State budgets when employers
terminate or reduce the benefits of employees and retirees,
including the costs that are incurred when employees and
retirees seek assistance from Federal and State government
programs and services as a result of the termination or
reduction of their employment-related benefits; and
(4) recommendations to prevent corporations from evading
contractual obligations to pay employee and retiree benefits.
<all>