What does Preamble of S 1381 do?

This bill, formally titled 'To amend title 11, United States Code, to improve protections for employees and retirees in business bankruptcies,' aims to modify existing bankruptcy law. The bill intends to enhance protections for employees and retirees during business bankruptcy proceedings.

What does SHORT TITLE; TABLE OF CONTENTS. of S 1381 do?

This bill is formally titled the Protecting Employees and Retirees in Business Bankruptcies Act of 2025.

What does Priority for severance pay and contributions to employee of S 1381 do?

This section establishes a priority for severance pay and contributions to employee benefit plans.

What does Effect on collective bargaining agreements under the Railway of S 1381 do?

This section addresses the effect on collective bargaining agreements under the Railway Labor Act.

What does FINDINGS. of S 1381 do?

This section outlines findings related to business bankruptcies. Congress finds that business bankruptcies have increased sharply and pose risks to job preservation and retirement security. Existing laws protecting employees and retirees in bankruptcy cases have not kept pace with the increasing use of bankruptcy by businesses. Management compensation plans are becoming more prevalent and are not receiving adequate scrutiny. Changes in the law are considered urgently needed due to increasingly complex conditions affecting troubled businesses and industries.

What does INCREASED WAGE PRIORITY. of S 1381 do?

This section amends Section 507(a) of Title 11 of the United States Code. Paragraph (4) is modified by redesignating existing subparagraphs as clauses, inserting '(A)' before 'Fourth', increasing the amount from $10,000 to $20,000, and removing a time limit. Paragraph (4) also adds a provision stating severance pay is deemed earned in full upon layoff or termination. Paragraph (5) removes a time limit and replaces subparagraph (B) with a new provision related to employee plans and a $20,000 limit per employee.

What does CLAIM FOR STOCK VALUE LOSSES IN DEFINED CONTRIBUTION PLANS. of S 1381 do?

This section amends Section 101(5) of Title 11 of the United States Code. The amendment adds a new subparagraph (C) outlining a right or interest in equity securities. This right applies to equity securities held in a defined contribution plan for the benefit of an individual who is not an insider, senior executive officer, or among the 20 highest compensated employees. The equity securities must be attributable to employer contributions, elective deferrals, or earnings thereon. The right arises if an employer or plan sponsor has committed fraud or breached a duty to the participant, proximately causing a loss of value.

What does PRIORITY FOR SEVERANCE PAY AND CONTRIBUTIONS TO EMPLOYEE of S 1381 do?

This section amends Section 503(b) of Title 11 of the United States Code. The amendment strikes 'and' at the end of paragraph (8)(B). The amendment strikes the period in paragraph (9) and inserts a semicolon. The amendment adds a new paragraph (10) regarding severance pay owed to employees of a debtor, excluding certain individuals. Severance pay under a generally applicable plan, program, or policy, or pursuant to a collective bargaining agreement, is deemed earned in full upon layoff or termination. The amendment adds a new paragraph (11) regarding contributions to employee benefit plans due on or after the petition filing date.

What does FINANCIAL RETURNS FOR EMPLOYEES AND RETIREES. of S 1381 do?

This section amends Section 1129(a) of Title 11, United States Code. It modifies paragraph (13) to address retiree benefits, requiring plans to continue payments at established levels or maintain benefits as they existed before the petition filing. The amendment allows for the recovery of claims arising from modifications to retiree benefits or other financial returns, as negotiated by the debtor and an authorized representative. A new paragraph (17) is added, enabling plans to provide for recovery of damages related to the rejection of collective bargaining agreements or other financial returns, also negotiated by the debtor and an authorized representative.

What does PRIORITY FOR WARN ACT DAMAGES. of S 1381 do?

This section amends Section 503(b)(1)(A)(ii) of title 11, United States Code. The amendment inserts language regarding back pay, civil penalties, or damages for violations of Federal or State labor and employment laws, including the Worker Adjustment and Retraining Notification Act (WARN Act). This insertion is made before the term 'wages and benefits' each place it appears.

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Protecting Employees and Retirees in Business Bankruptcies Act of 2025 — S. 1381

Last updated: 4/9/2025 · Introduced: 4/9/2025

Author: Richard Durbin (D-IL)

TL;DR (AI)

The bill increases the priority for employee wages and severance pay in business bankruptcy cases, with a new limit of $20,000 per employee.
It allows employees to claim for losses in their retirement accounts due to employer fraud or breach of duty, including claims for stock value losses in defined contribution plans.
The bill requires companies to continue paying retiree benefits at established levels during bankruptcy proceedings and allows for the recovery of claims related to modifications of retiree benefits.
It gives priority to payments for severance pay, contributions to employee benefit plans, and WARN Act damages, and requires courts to consider the preservation of employee jobs and benefits when approving sales of company assets.
The bill also limits executive compensation in bankruptcy cases, prohibits special compensation payments to insiders and senior executives, and allows for the recovery of excessive executive compensation payments made before bankruptcy.

119th Congressin committeeOfficial page

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