It is called Section 1113 C of the bankruptcy code.
Before it was enacted around 1983 a company could go into bankruptcy and just abrogate the CBA without any negotiations.
Now they have to follow the process before a judge can abrogate.
Section 1113© Motion Review
Section 1113© is the bankruptcy code under which a debtor seeks to reject a collective bargaining agreement or reach a consensual agreement with the Union to put in place long-term or permanent modifications to the Contract.
Example:
It was under a Section 1113© that the Restructuring Agreement, effective May 1, 2003 , came into effect. Absent this agreement, the court would have ruled on whether to accept or reject our Contract.
This section of the bankruptcy code provides the following parameters:
Prior to filing to reject a Contract, the debtor must make a proposal to the Union that details all of the modifications “necessary†to restructure while also assuring that all creditors and affected parties are treated “fairly and equitably.â€
The debtor must provide the Union with relevant information necessary to evaluate the debtor’s proposal.
Both parties are required to meet, at a reasonable time, to confer in “good faith†in an attempt to reach mutual agreement on modifications to the Contract.
Once the debtor officially files a Section 1113© motion with the court, a hearing will be scheduled to occur within 14 days after the filing date unless the parties mutually agree to a later date or the court determines a need to extend the hearing date according to the circumstances of the case. The bankruptcy judge will make a ruling on the motion within 30-days of the hearing. Discussions between the company and the Union may continue in an effort to work toward a consensual agreement up to the date of the court ruling.
Absent a consensual agreement and assuming the debtor has met the parameters listed above, the court will approve the rejection of the Contract if:
the Union has refused to accept such proposal without “good cause†(as determined by the court including the parameters listed above); and
the court determines that the concessions of other constituencies in the bankruptcy is commensurate to those made by labor .
Section 1113(e) Motion Review
Section 1113 (e) allows a debtor to ask the court for temporary or interim relief on an emergency basis. The Company must show that the changes sought are “essential to the continuation of the debtor’s business†or needed “to avoid irreparable damage†to the Company. Unlike the bankruptcy code under Section 1113©, the court has more latitude to determine the application of changes to a collective bargaining agreement.
Example:
It was under a Section 1113(e) motion that the Interim Relief Agreement, effective January 1, 2003 , went into “emergency†effect for nearly 9% cut in our wages. It was under this motion that the International Association of Machinists and Aerospace Workers Districts 141 and 141-M (IAM) refused a consensual agreement for a 13% “emergency†wage cut and the court subsequently imposed a wage cut of 14%.
On October 15, 2004, US Airways employees experience the effects of a Section 1113(e) motion when after several days of hearings that included arguments from the Union, the court imposed a 21% pay cut in addition to a few other productivity modifications on all employee groups except the pilots who had reached a consensual agreement for permanent cuts through the Section 1113© process. The court also ruled that the emergency cuts remain in place for a period of four months while US Airways seeks permanent cuts through a Section 1113© process.
Before it was enacted around 1983 a company could go into bankruptcy and just abrogate the CBA without any negotiations.
Now they have to follow the process before a judge can abrogate.
Section 1113© Motion Review
Section 1113© is the bankruptcy code under which a debtor seeks to reject a collective bargaining agreement or reach a consensual agreement with the Union to put in place long-term or permanent modifications to the Contract.
Example:
It was under a Section 1113© that the Restructuring Agreement, effective May 1, 2003 , came into effect. Absent this agreement, the court would have ruled on whether to accept or reject our Contract.
This section of the bankruptcy code provides the following parameters:
Prior to filing to reject a Contract, the debtor must make a proposal to the Union that details all of the modifications “necessary†to restructure while also assuring that all creditors and affected parties are treated “fairly and equitably.â€
The debtor must provide the Union with relevant information necessary to evaluate the debtor’s proposal.
Both parties are required to meet, at a reasonable time, to confer in “good faith†in an attempt to reach mutual agreement on modifications to the Contract.
Once the debtor officially files a Section 1113© motion with the court, a hearing will be scheduled to occur within 14 days after the filing date unless the parties mutually agree to a later date or the court determines a need to extend the hearing date according to the circumstances of the case. The bankruptcy judge will make a ruling on the motion within 30-days of the hearing. Discussions between the company and the Union may continue in an effort to work toward a consensual agreement up to the date of the court ruling.
Absent a consensual agreement and assuming the debtor has met the parameters listed above, the court will approve the rejection of the Contract if:
the Union has refused to accept such proposal without “good cause†(as determined by the court including the parameters listed above); and
the court determines that the concessions of other constituencies in the bankruptcy is commensurate to those made by labor .
Section 1113(e) Motion Review
Section 1113 (e) allows a debtor to ask the court for temporary or interim relief on an emergency basis. The Company must show that the changes sought are “essential to the continuation of the debtor’s business†or needed “to avoid irreparable damage†to the Company. Unlike the bankruptcy code under Section 1113©, the court has more latitude to determine the application of changes to a collective bargaining agreement.
Example:
It was under a Section 1113(e) motion that the Interim Relief Agreement, effective January 1, 2003 , went into “emergency†effect for nearly 9% cut in our wages. It was under this motion that the International Association of Machinists and Aerospace Workers Districts 141 and 141-M (IAM) refused a consensual agreement for a 13% “emergency†wage cut and the court subsequently imposed a wage cut of 14%.
On October 15, 2004, US Airways employees experience the effects of a Section 1113(e) motion when after several days of hearings that included arguments from the Union, the court imposed a 21% pay cut in addition to a few other productivity modifications on all employee groups except the pilots who had reached a consensual agreement for permanent cuts through the Section 1113© process. The court also ruled that the emergency cuts remain in place for a period of four months while US Airways seeks permanent cuts through a Section 1113© process.
