11 U.S.C. § 1113 — Rejection of collective bargaining agree-

Page 251 TITLE 11—BANKRUPTCY § 1113 (1) read as follows: ‘‘Except as provided in paragraph (2) of this subsection, subsection (c) of this section, and section 1104(a)(3), on request of a party in interest, and after notice and a hearing, absent unusual cir- cumstances specifically identified by the court that es- tablish that the requested conversion or dismissal is not in the best interests of creditors and the estate, the court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, if the movant establishes cause.’’ Subsec. (b)(2). Pub. L. 111–327, § 2(a)(33)(A)(ii)(I), in- serted introductory provisions and struck out former introductory provisions which read as follows: ‘‘The re- lief provided in paragraph (1) shall not be granted ab- sent unusual circumstances specifically identified by the court that establish that such relief is not in the best interests of creditors and the estate, if the debtor or another party in interest objects and establishes that—’’. Subsec. (b)(2)(B). Pub. L. 111–327, § 2(a)(33)(A)(ii)(II), substituted ‘‘converting or dismissing the case’’ for ‘‘granting such relief’’. Subsec. (e). Pub. L. 111–327, § 2(a)(33)(B), substituted ‘‘521(a)’’ for ‘‘521’’. 2005—Subsec. (b). Pub. L. 109–8 added subsec. (b) and struck out former subsec. (b) which consisted of intro- ductory provisions and pars. (1) to (10) relating to con- version of cases under this chapter to chapter 7 cases or dismissal for cause in the best interest of creditors and the estate. 1994—Subsec. (b). Pub. L. 103–394 inserted ‘‘or bank- ruptcy administrator’’ after ‘‘United States trustee’’. 1986—Subsec. (b). Pub. L. 99–554, § 224(1)(A), inserted ‘‘or the United States trustee’’ after ‘‘party in inter- est’’. Subsec. (b)(10). Pub. L. 99–554, § 224(1)(B)–(D), added par. (10). Subsec. (d). Pub. L. 99–554, § 256, inserted reference to chapter 12 and added par. (3). Subsecs. (e), (f). Pub. L. 99–554, § 224(2), (3), added sub- sec. (e) and redesignated former subsec. (e) as (f). 1984—Subsec. (a)(2). Pub. L. 98–353, § 505(a)(1), sub- stituted ‘‘originally was commenced as an involuntary case’’ for ‘‘is an involuntary case originally com- menced’’. Subsec. (a)(3). Pub. L. 98–353, § 505(a)(2), substituted ‘‘other than on’’ for ‘‘on other than’’. Subsec. (b)(5). Pub. L. 98–353, § 505(b)(1), inserted ‘‘a request made for’’ before ‘‘additional’’. Subsec. (b)(8). Pub. L. 98–353, § 505(b)(2), substituted ‘‘or’’ for ‘‘and’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by sec- tion 224 of Pub. L. 99–554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 256 of Pub. L. 99–554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see sec- tion 302(a), (c)(1) of Pub. L. 99–554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 1113. Rejection of collective bargaining agree- ments (a) The debtor in possession, or the trustee if one has been appointed under the provisions of this chapter, other than a trustee in a case cov- ered by subchapter IV of this chapter and by title I of the Railway Labor Act, may assume or reject a collective bargaining agreement only in accordance with the provisions of this section. (b)(1) Subsequent to filing a petition and prior to filing an application seeking rejection of a collective bargaining agreement, the debtor in possession or trustee (hereinafter in this section ‘‘trustee’’ shall include a debtor in possession), shall— (A) make a proposal to the authorized rep- resentative of the employees covered by such agreement, based on the most complete and reliable information available at the time of such proposal, which provides for those nec- essary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor and assures that all creditors, the debtor and all of the af- fected parties are treated fairly and equitably; and (B) provide, subject to subsection (d)(3), the representative of the employees with such rel- evant information as is necessary to evaluate the proposal. (2) During the period beginning on the date of the making of a proposal provided for in para- graph (1) and ending on the date of the hearing provided for in subsection (d)(1), the trustee shall meet, at reasonable times, with the au- thorized representative to confer in good faith in attempting to reach mutually satisfactory modifications of such agreement. (c) The court shall approve an application for rejection of a collective bargaining agreement only if the court finds that— (1) the trustee has, prior to the hearing, made a proposal that fulfills the requirements of subsection (b)(1); (2) the authorized representative of the em- ployees has refused to accept such proposal without good cause; and (3) the balance of the equities clearly favors rejection of such agreement. (d)(1) Upon the filing of an application for re- jection the court shall schedule a hearing to be held not later than fourteen days after the date of the filing of such application. All interested parties may appear and be heard at such hear- ing. Adequate notice shall be provided to such parties at least ten days before the date of such hearing. The court may extend the time for the commencement of such hearing for a period not exceeding seven days where the circumstances of the case, and the interests of justice require such extension, or for additional periods of time to which the trustee and representative agree. (2) The court shall rule on such application for rejection within thirty days after the date of the Page 252 TITLE 11—BANKRUPTCY § 1114 commencement of the hearing. In the interests of justice, the court may extend such time for ruling for such additional period as the trustee and the employees’ representative may agree to. If the court does not rule on such application within thirty days after the date of the com- mencement of the hearing, or within such addi- tional time as the trustee and the employees’ representative may agree to, the trustee may terminate or alter any provisions of the collec- tive bargaining agreement pending the ruling of the court on such application. (3) The court may enter such protective or- ders, consistent with the need of the authorized representative of the employee to evaluate the trustee’s proposal and the application for rejec- tion, as may be necessary to prevent disclosure of information provided to such representative where such disclosure could compromise the po- sition of the debtor with respect to its competi- tors in the industry in which it is engaged. (e) If during a period when the collective bar- gaining agreement continues in effect, and if es- sential to the continuation of the debtor’s busi- ness, 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, bene- fits, or work rules provided by a collective bar- gaining agreement. Any hearing under this paragraph shall be scheduled in accordance with the needs of the trustee. The implementation of such interim changes shall not render the appli- cation for rejection moot. (f) No provision of this title shall be construed to permit a trustee to unilaterally terminate or alter any provisions of a collective bargaining agreement prior to compliance with the provi- sions of this section. (Added Pub. L. 98–353, title III, § 541(a), July 10, 1984, 98 Stat. 390.) Editorial Notes REFERENCES IN TEXT The Railway Labor Act, referred to in subsec. (a), is act May 20, 1926, ch. 347, 44 Stat. 577. Title I of the Rail- way Labor Act is classified principally to subchapter I (§ 151 et seq.) of chapter 8 of Title 45, Railroads. For complete classification of this Act to the Code, see sec- tion 151 of Title 45 and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 98–353, title III, § 541(c), July 10, 1984, 98 Stat. 391, provided that: ‘‘The amendments made by this sec- tion [enacting this section] shall become effective upon the date of enactment of this Act [July 10, 1984]; pro- vided that this section shall not apply to cases filed under title 11 of the United States Code which were commenced prior to the date of enactment of this sec- tion.’’ § 1114. Payment of insurance benefits to retired employees (a) For purposes of this section, the term ‘‘re- tiree benefits’’ means payments to any entity or person for the purpose of providing or reimburs- ing payments for retired employees and their spouses and dependents, for medical, surgical, or hospital care benefits, or benefits in the event of sickness, accident, disability, or death under any plan, fund, or program (through the pur- chase of insurance or otherwise) maintained or established in whole or in part by the debtor prior to filing a petition commencing a case under this title. (b)(1) For purposes of this section, the term ‘‘authorized representative’’ means the author- ized representative designated pursuant to sub- section (c) for persons receiving any retiree ben- efits covered by a collective bargaining agree- ment or subsection (d) in the case of persons re- ceiving retiree benefits not covered by such an agreement. (2) Committees of retired employees appointed by the court pursuant to this section shall have the same rights, powers, and duties as commit- tees appointed under sections 1102 and 1103 of this title for the purpose of carrying out the purposes of sections 1114 and 1129(a)(13) and, as permitted by the court, shall have the power to enforce the rights of persons under this title as they relate to retiree benefits. (c)(1) A labor organization shall be, for pur- poses of this section, the authorized representa- tive of those persons receiving any retiree bene- fits covered by any collective bargaining agree- ment to which that labor organization is signa- tory, unless (A) such labor organization elects not to serve as the authorized representative of such persons, or (B) the court, upon a motion by any party in interest, after notice and hearing, determines that different representation of such persons is appropriate. (2) In cases where the labor organization re- ferred to in paragraph (1) elects not to serve as the authorized representative of those persons receiving any retiree benefits covered by any collective bargaining agreement to which that labor organization is signatory, or in cases where the court, pursuant to paragraph (1) finds different representation of such persons appro- priate, the court, upon a motion by any party in interest, and after notice and a hearing, shall appoint a committee of retired employees if the debtor seeks to modify or not pay the retiree benefits or if the court otherwise determines that it is appropriate, from among such persons, to serve as the authorized representative of such persons under this section. (d) The court, upon a motion by any party in interest, and after notice and a hearing, shall order the appointment of a committee of retired employees if the debtor seeks to modify or not pay the retiree benefits or if the court otherwise determines that it is appropriate, to serve as the authorized representative, under this section, of those persons receiving any retiree benefits not covered by a collective bargaining agreement. The United States trustee shall appoint any such committee. (e)(1) Notwithstanding any other provision of this title, the debtor in possession, or the trust- ee if one has been appointed under the provi- sions of this chapter (hereinafter in this section ‘‘trustee’’ shall include a debtor in possession), shall timely pay and shall not modify any re- tiree benefits, except that— (A) the court, on motion of the trustee or authorized representative, and after notice and a hearing, may order modification of such