In testimony before the House Judiciary Subcommittee on Commercial and Administrative Law, the IAM called for passage of H.R. 4677; Protecting Employees and Retirees in Business Bankruptcies Act of 2010, to close loopholes in current bankruptcy law that gives some corporations incentives to seek Chapter 11 bankruptcy protection.
“While Chapter 11 bankruptcy can provide struggling companies an opportunity to regroup and avoid liquidation, it is increasingly abused as a means to get a leg-up on the competition,” said IAM Transportation General Vice President Robert Roach, Jr. “Companies are also using bankruptcy as a means to take what they can from employees outside of the normal collective bargaining process, not just what is needed for a corporation to survive.”
Roach cited airlines use of bankruptcy protection to cease funding of defined benefit pension plans for tens of thousands of employees, which ultimately led to termination of those plans by the Pension Benefit Guaranty Corporation (PBGC).
“Bankruptcy law should be amended to ensure employers engage in good-faith bargaining when seeking contract modifications,” said Roach. “Companies should no longer be able to use the bankruptcy code to eliminate decades of collective bargaining gains when there is no justifiable reason - other than corporate greed.”
Click here for the entire testimony.
