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Bankruptcy Law

Chapter 13 personal bankruptcy is available for individual debtors seeking relief from personal obligations
Chapter 11 is available for the reorganization of business debts.
Chapter 7 is a liquidation of business assets to satisfy debts

Under Chapter 11, with court approval, a debtor can reject executory contracts including collective bargaining agreements. (Executory contracts are those in which duties or obligations are contingent on future performance of the parties to the contract).

Although employers have a duty to bargain under the NLRA, this provision conflicts with the Bankruptcy Reform Act of 1978. In 1984, through the Packwood-Rodino bill (Bankruptcy Amendments and Federal Judgeship Act), Congress resolved the conflict.

Before Court acts on petition to reject cba:

	Debtor in possession (DIP, the person selected to operate the business under bankruptcy) must make concessionary proposal to union
	The union must be furnished relevant information to determine necessity and equity of proposal
	DIP must bargain in good faith over concessions
	DIP must seek collective bargaining agreement modifications before filing petition
	When considering application for rejection, modifications to the collective bargaining agreement
	Rejection must “be necessary to permit reorganization”
	There is some dispute over what this means; whether prevention of liquidation or whether modifications are useful in reorganization and reasonable.