mike33
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1113(c) of that process is used to obtain PERMANENT changes.
1113(e) of that process is used to obtain TEMPORARY (“emergency” relief) changes
It was under a Section 1113(c) 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.
United’s Bankruptcy Judge Eugene Wedoff made the following statement in court on April 30, 2003 when approving the six-year concessionary agreements between United and each of the Unions, “… the power of the Court in a situation like this is really very limited ... the only power the Court has is to either grant or deny a motion by the debtor to reject a collective bargaining agreement. It's an all or nothing proposition. The parties themselves have the opportunity to create solutions of considerably more subtlety and appropriateness for the case.”
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(c), 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(c) 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(c) process.
While the example of Section 1113 at US Airways helps us understand the Bankruptcy Code, it should be clear that the circumstances at US Airways are very different from those at United Airlines.