October 1, 2007 - Two similar bills, one each in the U.S. Senate and the House of Representatives, are aimed at protecting the interests of workers and retirees in corporate bankruptcies.
“Wealthy executives get rewarded in bankruptcy for their failures while front-line workers shoulder the burden of corporate restructuring,” said General Vice President Robert Roach, Jr. “H.R. 3652, introduced by Representative John Conyers and S. 2092, introduced by Senator Richard Durbin, will address the inequities in the current bankruptcy law.”
IAM Representatives and airline members joined key lawmakers at a U.S. Capitol press conference announcing the bills. All IAM members are asked to contact their Senators and Representative to urge their support for the “Protecting Employees and Retirees in Business Bankruptcies Act of 2007”. Messages could be sent directly from the IAM website by following this link.
Key components of the bill include:
Makes paying workers what they’re owed as important as paying banks:
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Increases the payment priority for lost wages and benefit plans to $40,000 per employee;
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Lets workers recover on losses due to wage cuts and other concessions - just like other unsecured creditors who may receive distributions of stock or cash in a bankruptcy;
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Provides workers with a new claim for lost pension benefits when a defined benefit pension plan is terminated; workers whose 401(k) plans incur losses in company stock because of company fraud have an additional priority claim.
Ensures sacrifice is truly shared among CEOs and workers:
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Mandates that when workers are forced to accept wage and benefit cuts, creditors can take the same percentage in labor cost savings from compensation paid to certain members of the board of directors;
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Bars companies from leaving pension plans for executives intact when the employees’ pension plan has been terminated in bankruptcy;
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Bars companies from leaving health care benefits for retired executives intact when health care has been cut for rank-and-file retirees.
Protects workers against abuse and misuse of bankruptcy:
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Changes judicial procedures that now too easily allow employers to extract deep concessions well beyond what the company needs to reorganize and that workers must live with long after other creditors have cashed out their investments and moved on;
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Requires judicial review of a company’s foreign and domestic holdings in their entirety to determine whether relief from a labor agreement is warranted;
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Overturns recent court rulings in airline bankruptcies that have interpreted bankruptcy law to prohibit airline workers from engaging in economic self-help through strikes and other concerted activities. The right to self-help ensures that the bargaining parties understand the consequences of failing to reach a negotiated agreement.
Protects workers’ interests in a reorganization plan or sale of assets:
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Requires the bankruptcy court to consider the preservation of existing jobs and benefits when approving a company’s reorganization plan or a sale of assets to a third party.
