WASHINGTON – Today, House Judiciary Committee Ranking Member Jerrold Nadler (D-NY), U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, and U.S. Senator Josh Hawley (R-MO), a member of the Senate Judiciary Committee, today introduced the Protecting Employees and Retirees in Business Bankruptcies Act.  The bipartisan legislation would correct abuses of the bankruptcy process that deprive employees and retirees of their hard-earned wages, benefits, and retirement savings. 

As businesses’ bankruptcy filings have increased, jobs, pensions, and long-promised benefits are at risk.  Yet, laws have not adapted to give employees and retirees a fair shake in the bankruptcy process.  The Protecting Employees and Retirees in Business Bankruptcies Act would modify Chapter 11 bankruptcy procedures by expanding available claims for employees and retirees and granting them improved priority, while placing restrictions on excessive compensation for executives.

“No employee should have to worry about losing their well-deserved wages, benefits, or retirement savings when their employer declares bankruptcy,” said Representative Nadler. “The Protecting Employees and Retirees in Business Bankruptcies Act aims to guarantee that all workers, not just executives, receive the benefits they were promised.”

“Employees should not have to panic that they will lose their hard-earned wages, benefits, and retirement savings when their company files for bankruptcy,” said Senator Durbin.  “The Protecting Employees and Retirees in Business Bankruptcies Act would ensure that all employees, not just those at the top, receive the benefits they were promised.”

“When companies go bankrupt, workers—and not predatory creditors—should be taken care of first. This legislation would prioritize workers' claims to wages, benefits, and retirement funds in bankruptcy proceedings, protecting compensation earned through years of hard work,” said Senator Hawley.

Specifically, the Protect Employees and Retirees in Business Bankruptcies Act would:

• Improve Recoveries for Employees and Retirees. 
  • The bill increases the maximum value of employee wage claims entitled to priority payment from $10,000 to $20,000 per employee and allows an additional priority claim for each employee benefit plan of up to $20,000 per employee.  It also eliminates the restriction that priority wage and benefit claims must be earned within 180 days of the bankruptcy filing to be entitled to priority and would allow additional priority claims for workers’ severance pay.

• Protect Workers’ Rights in Bankruptcy.  
  • The bill tightens the conditions under which collective bargaining agreements can be rejected in bankruptcy.  It also toughens the procedures through which retiree benefits can be reduced or eliminated. 

• Restrict Excessive Executive Compensation Programs. 
  • The bill raises the threshold for obtaining court approval for executive bonuses and other excessive payouts to senior executives, the company’s 20 highest-paid employees, and highly paid consultants.  It also ensures that company insiders cannot retain their retirement or health benefit plans if rank-and-file workers have lost their benefits through the bankruptcy process.

• Focus on Preserving Jobs. 
  • The bill would re-center the Chapter 11 bankruptcy process by clarifying that the principal purpose of Chapter 11 is to preserve jobs and economically productive activity to the greatest extent possible.

Congressman Lou Correa (D-CA) is the House cosponsor of this legislation. 

Cosponsoring the legislation in the Senate are U.S. Senators Brian Schatz (D-HI), Mazie Hirono (D-HI), Tammy Duckworth (D-IL), Sherrod Brown (D-OH), Jeff Merkley (D-OR), and Amy Klobuchar (D-MN).

The Protect Employees and Retirees in Bankruptcies Act has earned endorsements from the International Brotherhood of Teamsters, AFL-CIO, Transportation Workers Union, United Mine Workers of America, Association of State, County and Municipal Employees, Airline Pilots Association, United Steelworkers, International Association of Sheet Metal, Air, Rail and Transportation Workers, Communications Workers of America, Association of Flight Attendants-CWA, Alliance for Retired Americans, International Federation of Professional and Technical Engineers, and Association of Professional Flight Attendants.

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U.S. Representative Jerrold Nadler represents New York's 12th Congressional District, which includes parts of Manhattan, and serves as the Ranking Member of the House Judiciary Committee.