Update #17

Treatment of Existing Collective Bargaining Agreements and Other Labor
Obligations Under the Bankruptcy Code 11 USC Sections 1113 and 1114

1. Company, acting as the “debtor in possession” or the court appointed bankruptcy trustee can reject an existing CBA only in accordance with the provisions of 11 USC Section 1113

a. Existing CBA is not “cancelled” simply because the employer has filed for bankruptcy court protection.

b. Existing CBA continues in effect unless the parties agree to modifications or the bankruptcy court grants the “debtor in possession” or bankruptcy court trustee’s motion to reject the existing CBA. Company must continue paying same wages and benefits and complying with all other provisions of the CBA.

c. Company must continue to deal with grievances through the grievance and arbitration procedure, though any monetary remedies might be affected by the Bankruptcy Code claim priority scheme.

2. Before the “debtor in possession” or bankruptcy court trustee can file a motion to reject a collective bargaining agreement, they must do all of the following:

a. make a proposal to the Union, based upon the most complete and reliable information available at the time of the proposal, which assures that all creditors, the debtor and all of the affected parties are treated fairly and equitably; and

b. provide the Union with all relevant information that is necessary to allow the Union to properly evaluate the proposal; and,

c. meet with the Union at reasonable times and bargain in good faith to try to reach a mutual agreement on the proposed modifications.

3. Before the bankruptcy court can approve the “debtor in possession” or bankruptcy court trustee’s motion to reject the existing CBA, the court must find that all of the following have occurred:

a.​the “debtor in possession” or bankruptcy court trustee have fully complied with Steps 2a-c of the above; and,

b.​the Union has refused to accept the proposal “without good cause”; and,

c.​the balance of the equities clearly favors rejection of the existing CBA.

4. If the bankruptcy court grants the Company’s motion to reject the CBA, the Company is legally permitted to implement its last, best and final offer. The rejection of the CBA, however, also eliminates any no-strike/ no lockout clause in the agreement, and the Union has the legal right to begin a strike.

5.​While the CBA remains in effect, and, typically, while a motion to reject is pending, the bankruptcy court can approve “interim changes” to the CBA if these changes are:

a.​essential to the continuation of the business; or,

a. necessary avoid “irreparable harm” to the debtor’s estate;

b. before any “interim changes” can be approved by the bankruptcy court there must be notice to the Union and a hearing to give the Union the opportunity to be heard on the proposed “interim changes”;

c. approval of “interim changes” does not mean the CBA has been rejected; “debtor in possession” or bankruptcy court trustee must still comply with everything above in order to set aside the existing CBA.

6.​Nothing in the Bankruptcy Code allows the “debtor in possession” or bankruptcy court trustee to unilaterally terminate or change anything in an existing CBA.

7.​Retiree Benefits: Retiree benefit programs, such as retiree health and life insurance, are protected under another section of the Bankruptcy Code, 11 USC Section 1114. The same substantive and procedural requirements that are described in paragraphs 1 through 6 above apply to efforts by a Company in bankruptcy to change or eliminate retiree insurance programs. Where the retiree benefit programs are collectively bargained, the Union serves as the representative of the retirees.

8. Other Issues:

a.​NLRB continues to have jurisdiction and Union/employees can file ULPs and the NLRB can issue complaints and have ULP trials.

b.​The Company is generally obligated to continue to provide workers’ compensation under provisions of state law.