Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 11– REORGANIZATION

Sub Chapter – Officers and Administration

Sec. 1113. Rejection of collective bargaining agreements

 (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 covered 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 representative 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 necessary 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 
    affected parties are treated fairly and equitably; and
        (B) provide, subject to subsection (d)(3), the representative of 
    the employees with such relevant 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 paragraph (1) and ending on the date of the 
hearing provided for in subsection (d)(1), the trustee shall meet, at 
reasonable times, with the authorized 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 employees 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 rejection 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 hearing. 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 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 commencement of the hearing, or within such 
additional time as the trustee and the employees' representative may 
agree to, the trustee may terminate or alter any provisions of the 
collective bargaining agreement pending the ruling of the court on such 
application.
    (3) The court may enter such protective orders, consistent with the 
need of the authorized representative of the employee to evaluate the 
trustee's proposal and the application for rejection, as may be 
necessary to prevent disclosure of information provided to such 
representative where such disclosure could compromise the position of 
the debtor with respect to its competitors in the industry in which it 
is engaged.
    (e) If during a period when the collective bargaining agreement 
continues in effect, and if essential to the continuation of the 
debtor's business, 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, benefits, 
or work rules provided by a collective bargaining 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 application 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 provisions 
of this section.

(Added Pub. L. 98-353, title III, Sec. 541(a), July 10, 1984, 98 Stat. 
390.)

                       References in Text

    The Railway Labor Act, referred to in subsec. (a), is act May 20, 
1926, ch. 347, 44 Stat. 577, as amended. Title I of the Railway Labor 
Act is classified principally to subchapter I (Sec. 151 et seq.) of 
chapter 8 of Title 45, Railroads. For complete classification of this 
Act to the Code, see section 151 of Title 45 and Tables.


                             Effective Date

    Section 541(c) of Pub. L. 98-353 provided that: ``The amendments 
made by this section [enacting this section] shall become effective upon 
the date of enactment of this Act [July 10, 1984]; provided 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 
section.

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