Labor Unions and Bankruptcy: Too Much Leverage?
(Bankruptcy Reform Study Project—National Symposium December 1995)

Overview

Written by:
Leonard M. Parkins
Web posted and Copyright © December 1995 American Bankruptcy Institute.

here has always been great tension between labor unions and the management of a company seeking to reorganize under bankruptcy laws. The predicate for that tension is that labor unions, on one hand, desire to protect the integrity of their collective bargaining agreements and the collective bargaining process under the National Labor Relations Act ("NLRA"); the debtor's management, on the other hand, wants to do whatever is necessary to successfully rehabilitate and reorganize the business under bankruptcy laws, including rejecting or abrogating collective bargaining agreements in order to immediately and substantially reduce the costs of operation.

Prior to the 1984 United States Supreme Court's decision of NLRB v. Bildisco & Bildisco,[1] bankruptcy courts overseeing corporate reorganization cases tried to reconcile the interests of organized labor with those of the Chapter 11 debtor. These courts generally applied a more stringent standard on a debtor's decision to reject a collective bargaining agreement than that used to approve the rejection of other types of executory contracts. Before Bildisco, different judicially created burdens and standards were employed by bankruptcy courts when considering whether to approve the rejection of a collective bargaining agreement under the Bankruptcy Code ("Code").

Bildisco resolved the existing conflict among the circuits as to the appropriate standards for bankruptcy judges to use when considering whether to authorize the rejection of a collective bargaining agreement. In Bildisco, the Supreme Court adopted a relatively liberal standard for rejecting collective bargaining agreements—a result that was favorable to corporations seeking relief under the Code, but one that was overwhelmingly denounced by organized labor.

The Bildisco Court ruled that a Chapter 11 debtor did not have to engage in collective bargaining efforts before unilaterally modifying or rejecting a collective bargaining agreement.[2] The Court also ruled that the unilateral act of rejection prior to bankruptcy court action did not in itself constitute a violation of the duty to bargain imposed by the NLRA.[3] Bildisco preempted a union's remedies under the NLRA against the debtor who was attempting to reject a labor agreement as part of its reorganization effort under Chapter 11 of the Code. Bildisco neither ended the debate nor resolved the tension between labor and management on the issue of rejecting collective bargaining agreements under the Code. To the contrary, Bildisco was a catalyst for major legislative change on the issue.

Bildisco was the controlling law on the standards for rejection of collective bargaining agreements for less than six months. Organized labor viewed Bildisco as an anathema and successfully lobbied Congress to pass new labor legislation as an amendment to the bankruptcy laws. In June, 1984, Congress passed the Bankruptcy Amendments and Federal Judgeship Act of 1984.[4] Section 1113 of the Code, which governs the rejection of collective bargaining agreements, was included as part of that new legislation.[5] Section 1113 codified, modified and reversed parts of Bildisco.[6] Section 1113 raised the standards needed for a bankruptcy court to authorize the rejection of a collective bargaining agreement, making it more difficult for the debtor to unilaterally act in contravention of the rights of organized labor under the NLRA. Section 1113 of the Code was passed to accomplish two major goals for organized labor:

  1. to put a halt to an employer's unilateral ability to change the terms and conditions of collective bargaining agreements during a Chapter 11 case; and
  2. to reduce the perceived tendency of bankruptcy judges to approve the rejection of collective bargaining agreements without giving due regard to national labor policy and laws.[7]

Section 1113 is viewed as a pro-labor statute. It provides the sole means by which a private sector entity can assume, reject or modify a collective bargaining agreement.

Section 1113, however, was passed hastily, fraught with ambiguities and lacked definitions for key terms used in the statute.[8] Over the last decade, §1113's ambiguous provisions have given rise to inconsistent judicial interpretation. Further, §1113 was not made applicable to governmental entity debt restructurings under Chapter 9 of the Code. This fact has given municipalities like Orange County, California the power to rely on the more liberal standards for labor contract rejection annunciated in Bildisco to allow for the unilateral laying off of municipal employees and for radically cutting labor costs of the municipality without going through the rigors of a §1113 protocol.

Should Congress amend §1113 to resolve its ambiguities and perceived lack of definition? Does Congress need to amend the Code to make §1113 apply to Chapter 9 municipal cases? This symposium will address the strengths and weaknesses of labor unions in public and private bankruptcy cases and focus on whether §1113 or other sections of the Code should to be amended to further address the tensions between labor laws and bankruptcy laws.

A Real Conflict Exists Between Labor Law and Bankruptcy Law

Labor relations between employers and unions are generally regulated by the National Labor Relations Board[9] (the "NLRB") as established in the NLRA. Under §8(a)(5) of the NLRA, an employer cannot refuse to bargain collectively with employee representatives.[10] Under the NLRA, an employer must bargain to "impasse" before making unilateral changes to terms and conditions of employment established in a collective bargaining agreement.[11] Specifically, §8(d) of the NLRA forbids an employer from rejecting or modifying the terms of a collective bargaining agreement before its expiration without obtaining union consent.[12]

On the other hand, §365(a) of the Code allows a debtor to reject executory contracts or unexpired leases to which it is a party.[13] Therefore, absent case or statutory law to the contrary, under §365 of the Code, any executory contract, which includes collective bargaining agreements, can be rejected unilaterally if the contract is onerous to the debtor and, in the debtor's business judgment, should be rejected.[14]

Clearly, a debtor's ability to reject unilaterally a collective bargaining agreement violates the spirit and letter of the NLRA, creating a major conflict between two major pieces of federal legislation. It is this conflict that the courts and Congress have been trying to resolve for many decades.

One commentator has summarized this conflict between labor and bankruptcy law as follows: Labor law generally favors stability of the collective-bargaining relationship and generally disfavors unilateral actions by employers. Bankruptcy law, on the other hand, often contemplates a radical alteration of existing business relationships and permits changes whether other affected parties consent or not. Whereas labor law attempts to strike a somewhat neutral balance between the rights of employers and the rights of employees, bankruptcy unquestionably favors debtors over creditors. And although labor law affords unions certain privileges and immunities that are not enjoyed by others in the business community, bankruptcy law generally disfavors the special or unequal treatment of creditors.[15]

Standards Used by Courts to Authorize the Rejection of Collective Bargaining Agreements Prior to Bildisco

Despite the fact that a collective bargaining agreement is an executory contract, most courts before Bildisco recognized that a collective bargaining agreement is different from other commercial executory contracts. These courts did not permit the rejection of labor agreements under the same business judgment standard applicable to commercial executory contracts.[16] Under the business judgment test, a debtor only has to show that the rejection of an executory contract will benefit the estate or that the contract is burdensome to the estate.

In effect, the few courts that applied the business judgment test to the rejection of collective bargaining agreements decided that the Code took precedence over the NLRA.

Most bankruptcy courts prior to Bildisco, however, abandoned the business judgment standard as the measuring stick when determining whether rejection of a collective bargaining agreement should be authorized. Higher standards were required by bankruptcy courts to authorize rejection of labor agreements because courts recognized the need to address and better reconcile the competing interests of labor law and bankruptcy law. These courts recognized the tension between labor and management and tried to find an acceptable balance between labor law and bankruptcy law.

There were two primary judicially created standards for authorizing rejection of a collective bargaining agreement before Bildisco. The first of these standards was known as the "failure of business" or "survival test." This standard was established by the Second Circuit in Brotherhood of Railway, Airline and Steamship Clerks v. REA Express, Inc.[17] Under REA Express, a Chapter 11 debtor could only reject a collective bargaining agreement if it could prove that absent rejection, the debtor would be forced to liquidate. Under this standard, rejection would be permitted only after a court weighed all of the evidence and concluded that the collective bargaining agreement was so onerous and burdensome that it would thwart the efforts to save a failing company in bankruptcy from collapse.[18] Thus, rejection of a collective bargaining agreement was approved only when the company was in danger of collapsing and its employees likely to lose their jobs if the agreement were not rejected.[19] The REA Express standard was viewed as a pro-labor standard, requiring very strong evidence of impending liquidation before rejection of a collective bargaining agreement would be authorized by a bankruptcy judge.

The second judicially created standard was called the "Balancing of the Equities Test." This standard was established by the Second Circuit in Shopman's Local 455 v. Kevin Steel Prods., Inc.,[20] and by the Eleventh Circuit in In re Brada Miller Freight Sys.[21] Under this standard, a collective bargaining agreement could be rejected if the court concluded that rejection was appropriate after balancing the equities between labor and management. The Kevin Steel and Brada Miller standard required that the bankruptcy court examine (i) the motivations of a debtor in filing Chapter 11, (ii) proof of the financial difficulty which required the debtor to file Chapter 11, and (iii) a balancing of the equities such that rejection would create beneficial results when compared to the loss of employee rights with contract rejection. The Kevin Steel and Brada Miller standards were viewed as pro- debtor and offered corporate debtors and bankruptcy judges a much more flexible approach to authorizing rejection of collective bargaining agreements than that required under REA Express. These two competing and conflicting standards for authorizing the rejection of collective bargaining agreements were used by bankruptcy judges until Bildisco.

The Bildisco Standards for Authorizing the Rejection of a Collective Bargaining Agreement under the Code

Bildisco resolved the conflict among the circuits as to what standard a bankruptcy judge should apply to allow the rejection of a collective bargaining agreement. Bildisco held that collective bargaining agreements were executory contracts subject to review under the standards of §365 of the Code.[22] The Court held that a Chapter 11 debtor could reject a collective bargaining agreement if the debtor could show that the agreement was burdensome to the bankruptcy estate and that the balance of the equities favored rejection.[23] The Court set out the following factors to be considered when deciding if a collective bargaining agreement should be rejected:

The bankruptcy court must make a reasoned finding on the record why it has determined that rejection should be permitted. Determining what would constitute a successful rehabilitation involves balancing the interests of the affected parties -the debtor, creditors and employees. The Bankruptcy Court must consider the likelihood and consequence of liquidation for the debtor absent rejection, the reduced value of the creditors' claims that would follow from affirmance and the hardship that would impose on them, and the impact of rejection on the employees. In stretching the balance, the bankruptcy court must consider not only the degree of hardship faced by each party, but also any quantitative difference between the type of hardship each may face.[24]

Bildisco also held that a Chapter 11 debtor could unilaterally reject a collective bargaining agreement without being responsible for unfair labor practice under the NLRA.[25] The Court also ruled that before allowing rejection, the bankruptcy court must be convinced that the debtor made voluntary efforts to negotiate with its unions to obtain a reasonable modification of the collective bargaining agreement.[26]

The Bildisco decision was seen as a victory for companies that wanted Chapter 11 protection to avoid obligations under collective bargaining agreements. To organized labor, however, Bildisco represented an invitation to the unilateral abrogation of collective bargaining agreements by Chapter 11 companies. Organized labor immediately went to Congress to seek relief from the Bildisco decision.

The Legislative Effort to Override Bildisco

At the urging of organized labor, Congress focused on the Bildisco decision and its adverse impact on labor. In the spring of 1984, Congress was already considering new legislation because of the Supreme Court's decision in Northern Pipeline which created a jurisdictional void of power in bankruptcy judges.[27] Congressman Rodino, then chairman of the House Judiciary Committee, introduced legislation that would have overruled Bildisco and disallowed unilateral rejection of collective bargaining agreements without bankruptcy court approval. Congressman Rodino sought to legislate the REA Express standard into the new amendments to the Bankruptcy Code.[28] Senators Packwood and Thurman, however, each introduced different proposals for new bankruptcy legislation in the Senate. Senator Packwood proposed legislation that would have required a debtor to propose only the minimum modifications needed to facilitate a successful reorganization and provide the unions with necessary information to evaluate the proposal, required negotiation, and allowed for an expedited hearing and decision by the bankruptcy court. Senator Packwood's proposal was also to apply retroactively.[29] Senator Thurman's proposal would have incorporated the Bildisco decision and the balancing of the equities test into the new Code.[30] After debate, and because of a need to quickly enact a bankruptcy code that would allow the bankruptcy courts to function in light of ]Northern Pipeline, a compromise was reached on standards to apply to the rejection of collective bargaining agreements. The compromise differed from all other proposals introduced previously. The resulting §1113 was embodied as one of the amendments to the Bankruptcy Amendments and Federal Judgeship Act of 1984.[31]

Unfortunately, while the compromise reflected by §1113 reached a joint conference committee, that committee did not produce a conference report. As a result, no definitive legislative history exists on the statute. All that courts can look to are the inconsistent statements from various congressmen and senators as contained in the Congressional Record.[32]

Section 1113 of the Code created a new balance between labor law and bankruptcy law through the enactment of new procedural and substantive standards for allowing bankruptcy courts to authorize the rejecting of collective bargaining agreements. These procedures and standards embodied in §1113 are summarized as follows:

In lieu of permitting a debtor to reject unilaterally a collective bargaining agreement without violating the NLRA, §1113(e) of the Code provides a debtor with available interim relief when a debtor is facing an immediate business crises and there is insufficient time to engage in all of the required steps of §1113. In order to obtain interim emergency relief under §1113(e), a debtor must meet a very high standard and burden of proof. Any interim modification of a collective bargaining agreement must be made only when it is essential to the continuation of the debtor's business or necessary to avoid irreparable damages to the estate.[34] This means that the §1113(e) interim relief will be available only when the Chapter 11 debtor will collapse and its employees will loose their jobs absent the interim relief from the collective bargaining agreement.

The substantive standards for authorizing rejection of a collective bargaining agreement set out in §1113 lack clarity and have given rise to disparate judicial interpretation. The lack of a definitive legislative history for this statute has given rise to much uncertainty.[35] Terms such as "necessary," "good faith," "fairly and equitably," and "good cause," which are used in §1113 are not defined in the statute. As a result, §1113 has been interpreted in an inconsistent manner by various circuits that have addressed the issue of what standards should be used to authorize rejection of collective bargaining agreements under §1113 of the Code.

Other Labor Legislation Following Enactment of §1113

After the passage of §1113 in 1984, other labor related bankruptcy legislation followed in a continuing effort to cure what was perceived to be a definite pro-business, pro-debtor imbalance in the bankruptcy laws. Collective bargaining agreements often contained provisions that provided for a guarantee of continuing medical benefits for union retirees of a company. One substantive issue that confronted bankruptcy courts was whether retired employees should be included for the purpose of §1113 protection. The Sixth Circuit in United Steel Workers v. Unimet Corp.[36] and the Second Circuit in Century Brass Prod., Inc. v. Int'l Union United Auto Workers[37] ruled that retirees were employees for purposes of §1113 requirements. These courts held that a Chapter 11 debtor was required to make retiree benefit payments during bankruptcy until there was court approval of the modification or contract rejection. In 1988, Congress codified Unimet and Century Brass by passing §1114 of the Code.[38] Section 1114 requires a Chapter 11 debtor to make a showing that the modification of retiree benefits is required in order to permit the debtor to reorganize before court approved modifications of retiree benefits can be permitted.[39] One question that remained open even after the enactment of §1114 appeared in a bankruptcy case involving the treatment of retiree benefits under both §1113 and §1114. The issue before the court was which code section controls when the benefits are addressed by both code sections. The bankruptcy court ruled that it would apply the rule of statutory interpretation that the more specific statute supersedes the more general. In that litigation the court found that §1114 controlled.[40]

Ten Years after the Enactment of §1113, We Face Inconsistent Circuit Court Decisions Interpreting this Statute

The Third Circuit in the case of Wheeling Pittsburgh Steel Corp. v. United Steel Workers of America[41] was the first appellate court to interpret §1113. The Third Circuit reversed a district court's affirmation of a bankruptcy court order allowing the debtor's rejection of a collective bargaining agreement. In reaching its decision, the court focused on two distinct areas of inquiry: (i) the necessity of the proposed modifications to the collective bargaining agreement, and (ii) the objectives of the proposed modifications.

Under the first inquiry, the court held that the bankruptcy court should permit only essential, minimum modifications to the collective bargaining agreement and construed the term "necessary" in §1113 to mean "essential." Under the second inquiry, the court determined that the objective of the modifications should be the shortterm goal of preventing the liquidation of the debtor, rather than the longterm Chapter 11 goal of restoring financial health to the debtor. The Wheeling Pittsburgh case was viewed as a very prolabor decision.[42]

In contrast to Wheeling Pittsburgh, the Second Circuit construed §1113 in a more flexible manner in Truck Drivers' Local 807 v. Carey Trans. Inc.[43] In Carey, the court held that necessary modifications need not be restricted to those that are absolutely "essential" or "minimal," and that "reorganization" refers to the longterm financial viability of the debtor, rather than the shortterm goal of preventing the debtor's immediate liquidation.[44]

The Second Circuit looked to the legislative history behind §1113 in rendering its decision. The Court determined that Congress must have intended that the debtor be able to propose changes to the collective bargaining agreement which are greater than the "minimum," as long as those changes were made in good faith.[45] The court also ruled based on the legislative history that "reorganization" in §1113 refers to the longterm financial viability of the debtor.[46] To reach this conclusion, the court reasoned that a debtor concerned only with shortterm relief should file for relief under §1113(e), the interim relief subsection.[47]

The Second Circuit noted that §1113 codified the "balancing of the equities" standard of ]Bildisco.[48] The Carey court delineated six factors as being necessary to properly balance the equities in determining whether a collective bargaining agreement should be rejected. These factors are:

The Second Circuit concluded that the "necessity" requirement of §1113 places the burden on the debtor to prove that the proposal to modify the collective bargaining agreement is made in good faith, and that it contains necessary changes that will enable the debtor to reorganize successfully.[50]

In 1990, the Tenth Circuit in In re Mile Hi Metal Systems, Inc.,[51] adopted the Second Circuit's more flexible interpretation of §1113 and moved away from the rigid ruling of Wheeling Pittsburgh. Despite Congressional efforts, however, there still exists wide disparity among the circuits on the §1113 standards for authorizing rejection of collective bargaining agreements. To a large extent, these differences arise because Congress failed to define the essential terms used in §1113 and failed to issue a conference committee report indicating the legislative intent behind the various statutory subparts.

The Reality of the Marketplace
The Checks and Balances Between Labor and Management

The rejection of a collective bargaining agreement by a bankruptcy court signals a new phase of negotiation between the debtor and its unions. Rejection does not eliminate the debtor's continuing duty to negotiate in good faith in order to achieve a new labor contract.[52] The unions still have strong weapons against the debtor even after rejection. The debtor still needs employees to operate its business and the unions still retain the ability to strike to seek better conditions in the work place prospectively.

Some commentators believe that the focal point of a court's inquiry when confronting the decision on whether to permit rejection of a collective bargaining agreement is the likelihood and impact of a strike by the debtor's employees. The court's judgment as to the likelihood of a strike is the key factor in evaluating whether contract rejection will help or cripple a debtor's reorganization efforts.[53] When analyzing the likelihood of whether a strike will impair the reorganization, it is important to consider several key factors: (i) what are the financial resources available to the unions to commence and maintain a strike, and (ii) what is the ability of the employer to recruit and maintain qualified strike replacement workers. Ultimately, the court's decision may come down to an assessment of the economic power of both sides to the labor dispute. Courts need to recognize that the approval of a motion to reject a collective bargaining agreement may not solve the debtor's problems; rather it may worsen them if a strike results.

When assessing the probability of a strike, the court should look at the following issues: (i) the response of employees of other companies in the same industry after the labor contracts have been rejected, (ii) the size and labor intensiveness of the debtor company (larger and more labor intensive companies are usually better organized and more prone to strike), and (iii) whether the company is in the transportation or trucking industry or has been recently deregulated (because such industries are more prone to strikes).[54] Bankruptcy courts should consider the risk of strike, the third Carey factor,[55] as relevant and material in evaluating whether to authorize rejection of the agreement. Since the debtor must continue to bargain in good faith to reach a new labor agreement with its unions, the ultimate answer to the dispute between labor and management lies in the market place where both the union and the debtor company can use their respective economic powers to negotiate a resolution of their dispute.

Where Do We Go from Here?

Bankruptcy courts need to realize that even though they can authorize rejection of a collective bargaining agreement, the relationship and tension between labor and management will continue to exist. It is important to focus on the fact that the process of attempting to reach consensus by negotiation is a common philosophy of both bankruptcy and labor law. The courts should promote negotiation in good faith among the parties in order to achieve a mutually acceptable resolution of the disputed issues.

Labor law stresses maintenance of industrial peace through free collective bargaining and through adherence to the terms of collective bargaining agreements reached through tough negotiation. Chapter 11 policy has a somewhat parallel line: the development of an agreed plan of reorganization to allow a financially distressed company to emerge as a productive economic entity on a long term basis.

The disparate interpretations of §1113 by the courts has made the ability to reject collective bargaining agreements uncertain. Rejection of a collective bargaining agreement offers only temporal relief to the disputes between labor and management in a particular company. Chapter 11 can be very costly and time consuming. Seeking Chapter 11 relief for the purpose of rejecting a collective bargaining agreement can have the effect of polarizing parties and wasting valuable time and resources.

In 1994, Christopher D. Cameron published an article containing the first empirical analysis of the following question: is §1113 is working?[56] Cameron's article reviewed all reported bankruptcy decisions and motions filed to reject collective bargaining agreements under §1113 since July, 1984. The article focused on what bankruptcy courts were really doing in the context of §1113 rejections. The study examined 46 reported bankruptcy court decisions in which a debtor filed at least one §1113 application, 38 reported decisions in which complete contract rejection was sought under §1113(c), and 20 in which interim modifications of the contract were sought under §1113(e).[57] Cameron's empirical study made some important findings about how §1113 is working. After a decade, labor's goals of halting unilateral rejection of collective bargaining agreements and reducing the tendency of bankruptcy courts to allow debtors to reject collective bargaining agreements has been achieved. Cameron's study found that the rate of rejection has declined from about 67% before §1113 was enacted to about 58% today.[58] The study indicates that bankruptcy courts are more sensitive to the position of organized labor during reorganization proceedings and are requiring debtors to satisfy the requirements of §1113 before granting rejection. Thus, it appears that the goals of organized labor for seeking the enactment of §1113 to overrule Bildisco have been achieved.

Section 1113 has been the law for 11 years. It is a statute fraught with ambiguity. It does not apply to Chapter 9 municipal bankruptcies. The statute has no definitive legislative history to speak of, yet what legislative background exists has been the cornerstone of disparate circuit court decisions interpreting the statute's meaning. Should Congress go back to the drawing board and further amend the Code to address these issues?

Ultimately, Congress must determine whether an acceptable balance of power and policy exists under the bankruptcy laws or whether additional change is needed to better integrate the policies of bankruptcy law and labor law.

Web posted and Copyright © December 1995, American Bankruptcy Institute as part of The ABI National Symposia Series, a component of the ABI Bankruptcy Reform Study Project. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher and copyright holder.

Footnotes

[1] 465 U.S. 513 (1984).[RETURN TO TEXT]

[2] Id. at 527-534.[RETURN TO TEXT]

[3] Id.; 29 U.S.C. §§151-169 (1988).[RETURN TO TEXT]

[4] Pub. L. No. 98-353, 98 Stat. 333 (1984).[RETURN TO TEXT]

[5] See Pub. L. No. 98-353, §541 (a), 98 Stat. 390, 390-91 (1984) (codified at 11 U.S.C. §1113) (1988)[RETURN TO TEXT]

[6] Christopher D. Cameron, How "Necessary" Becomes the Mother of Rejection: An Empirical Look at the Fate of Collective Bargaining Agreements on the Tenth Anniversary of Bankruptcy Code Section 1113, 34 Santa Clara L.R. 841 (1994). See 11 U.S.C. §1113 (1988).[RETURN TO TEXT]

[7] 11 U.S.C. §1113 (1988).[RETURN TO TEXT]

[8] Daniel S. Ehrenberg, Rejecting Collective Bargaining Agreements Under Section 1113 of Chapter 11 of the 1984 Bankruptcy Code: Resolving the Tension Between Labor Law and Bankruptcy Law, 2 J.L. & Pol'y 55, 68-69, 74, 83 (1994) (hereafter "Ehrenberg"); See also Daniel Keating, The Continuing Puzzle of Collective Bargaining Agreements in Bankruptcy, 35 Wm. and Mary L. Rev. 503, 548 (1994).[RETURN TO TEXT]

[9] 29 U.S.C. §153 (1988).[RETURN TO TEXT]

[10] 29 U.S.C. §158(a)(5). Specifically, the refusal to bargain collectively by an employer is an unfair labor law practice. An "unfair labor practice" is a violation of the NLRA and the party violating the law can be sanctioned by the NLRB.[RETURN TO TEXT]

[11] See Ehrenberg, supra, n. 8 at 58. "Impasse" has been defined to mean "a state of facts which the parties, despite the best of faith, are simply deadlocked." NLRB v. Tex-Tan, Inc., 318 F.2d 472, 482 (5th Cir. 1963).[RETURN TO TEXT]

[12] 29 U.S.C. §158(d) (1988).[RETURN TO TEXT]

[13] 11 U.S.C. §365(a) (1988).[RETURN TO TEXT]

[14] Bildisco, 465 U.S. at 522-23.[RETURN TO TEXT]

[15] Ehrenberg, supra, n. 8, at 60-61, citing Thomas R. Hagard and Mark S. Pulliam, Conflicts Between Labor Legislation and Bankruptcy Law, at 5-6.[RETURN TO TEXT]

[16] See In re Klaber Bros., 173 F. Supp. 83 (S.D.N.Y. 1959) (seminal case); In re Reserve Roofing, 21 B.R. 96 (Bankr. M.D. Fla. 1982); Local Executive Board AFL-CIO v. Hotel Circle, Inc., 419 F. Supp. 778 (S.D. Cal. 1976).[RETURN TO TEXT]

[17] 523 F.2d 164 (2d Cir. 1975) cert. denied, 423 U.S. 1017 (1975).[RETURN TO TEXT]

[18] 523 F.2d at 169.[RETURN TO TEXT]

[19] Id. at 172.[RETURN TO TEXT]

[20] 519 F.2d 698 (2d Cir. 1975).[RETURN TO TEXT]

[21] 702 F.2d 890 (11th Cir. 1983).[RETURN TO TEXT]

[22] 465 U.S. at 522-23.[RETURN TO TEXT]

[23] Id. at 526-27.[RETURN TO TEXT]

[24] Bildisco, 465 U.S. at 527.[RETURN TO TEXT]

[25] Id. at 533-34.[RETURN TO TEXT]

[26] Id. at 526.[RETURN TO TEXT]

[27] Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50 (1982).[RETURN TO TEXT]

[28] See Ehernberg, supra, n.8, at 68-69.[RETURN TO TEXT]

[29] See Id. at 69. The Packwood proposal was drafted to apply retroactively to make it applicable to the Continental Airlines bankruptcy case, filed in September 1983.[RETURN TO TEXT]

[30] Id. at 68.[RETURN TO TEXT]

[31] Pub. L. No. 98-353, 98 Stat. 333 (1984).[RETURN TO TEXT]

[32] Ehrenberg, supra, n.8, at 71.[RETURN TO TEXT]

[33] See 11 U.S.C. §1113(b)(1)(A) - 1113(c). These nine points were specifically identified in In re American Provision Co., 44 B.R. 907 (Bankr. D. Minn. 1984). They have been employed by the majority of the courts that have considered whether a debtor has met the §1113 requirements for rejecting a collective bargaining agreement. In addition to the other requirements of §1113, the hearing on the debtor's application to reject must be scheduled within 14 days after filing and the court is required to rule within 30 days of the application, unless special circumstances occur or the parties agree to a postponement. 11 U.S.C. §1113(d).[RETURN TO TEXT]

[34] See 11 U.S.C. §1113(e).[RETURN TO TEXT]

[35] When construing a statute, where the language of the statute is plain, there is no obligation or need to interpret the statute. If a statute is ambiguous, courts can resort to the statute's legislative history for clarification. A congressional committee report is the authoritative source for finding the legislative intent behind the statute because the committee report reflects the considered and collective understandings of those who drafted and structured the legislation in question. No congressional committee reports exist for §1113. See Ehrenberg, supra, n.8, at Notes 67,68 and 69.[RETURN TO TEXT]

[36] 842 F.2d 879 (6th Cir.), cert denied, 488 U.S. 828 (1988).[RETURN TO TEXT]

[37] 795 F.2d 265 265 (2d Cir.), cert. denied, 479 U.S. 949 (1986).[RETURN TO TEXT]

[38] Pub. L. No. 100-334, §2(a), 102 Stat. 610, 610-4 (1988).[RETURN TO TEXT]

[39] 11 U.S.C. §1114(e)-(g) (1988).[RETURN TO TEXT]

[40] In re Ionosphere Clubs, Inc., 134 B.R. 515 (Bankr. S.D.N.Y. 1991).[RETURN TO TEXT]

[41] 791 F.2d 1074 (3d Cir. 1986).[RETURN TO TEXT]

[42] In rendering its decision, the Third Circuit relied upon its analysis of the legislative history behind §1113 and determined that the Packwood proposal was the one that Congress ultimately adopted. See 791 F.2d at 1088. Again, relying on legislative history, the court interpreted the phrase "necessary to permit reorganization of the debtor," found in §1113(b)(1)(A) to be focused only on the short term goal of preventing liquidation. Id. at 1090.[RETURN TO TEXT]

[43] 816 F.2d 82 (2d Cir. 1987).[RETURN TO TEXT]

[44] Id. at 96.[RETURN TO TEXT]

[45] Id.[RETURN TO TEXT]

[46] Id. at 89.[RETURN TO TEXT]

[47] Id.[RETURN TO TEXT]

[48] Id. at 92.[RETURN TO TEXT]

[49] Id. at 93.[RETURN TO TEXT]

[50] Id. at 90.[RETURN TO TEXT]

[51] 899 F.2d 887 (10th Cir.1990).[RETURN TO TEXT]

[52] Bildisco, 465 U.S. at 534.[RETURN TO TEXT]

[53] Ehrenberg, supra, n.8, at 93-94[RETURN TO TEXT]

[54] Id.[RETURN TO TEXT]

[55] Carey, 816 F.2d at 93.[RETURN TO TEXT]

[56] Cameron, supra, at 1.[RETURN TO TEXT]

[57] Id. at 14.[RETURN TO TEXT]

[58] Id. at 31.[RETURN TO TEXT]