Democrats to Push Bill to Protect Workers

[question everything]

The Wall Street Journal

Democrats to Push Bill to Protect Workers
By KRIS MAHER
September 25, 2007; Page A2

Democratic leaders and labor officials are expected to reveal new legislation today aimed at giving workers more protection during corporate bankruptcies, as part of an increasing effort to bring labor issues to the fore ahead of next year's elections.

The legislation, called the Protecting Employees and Retirees in Business Bankruptcies Act of 2007, includes provisions to make it tougher to dissolve collective-bargaining agreements and to increase payouts to workers when companies declare bankruptcy. It also provides ways to reduce executive compensation in line with cuts imposed on workers, and would reimburse retirees who have lost health benefits using proceeds from asset sales. The bill also would permit airline workers to strike after airlines declare bankruptcy, a move that federal bankruptcy courts have blocked.

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Experts said the bill, which would make the bankruptcy process more burdensome to corporate managers, has little chance of passing in the Senate because of opposition from business groups. Michael Bernstein, chairman of the bankruptcy practice at Arnold & Porter LLP, in Washington, D.C., called several of the provisions "radical" and said they could hurt a company's ability to reorganize. Still, experts said the legislation will allow organized labor to put top issues before Congress and see how various members, especially those up for re-election in 2008, vote.

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The bill, which is sponsored by Rep. John Conyers of Michigan in the House and Sen. Richard Durbin of Illinois in the Senate, will "signal the inequities that are occurring in the restructuring process right now," Mr. Kochan said. Its sponsors hope the legislation could gain momentum from broader efforts by Democrats to revise aspects of bankruptcy law that they contend hurt individuals. Sen. Durbin plans to introduce separate legislation as early as this week intended to help an estimated 2.2 million people who have been affected by the mortgage crisis. In the corporate arena, labor officials have argued the bankruptcy process has become an all-too-common strategy for employers who want to void labor contracts. Meanwhile, some companies have argued that high labor costs have helped push them into bankruptcy and need to be lowered in order for a reorganized company to compete.

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[Indy Lurker]

1. I need to read the details

But there seems to be a downside. With this in place, no one will buy or invest in a struggling or bankrupt business. In other words, the purpose of a bankruptcy / restructure is to reduce debt to the point where the company can function. Without the debt reduction, there is no point to bankruptcy / restructuring, and businesses will just close their doors for good, which would seem to be worse for everyone.

[question everything]

2. One example: Northwest Airlines

Last year it went into bankruptcy and got major concessions from its pilots, mechanics and flight attendants unions. A year later it went out of it and awarded millions of dollars to its CEO and other top management. I think that some of the unions now want to renegotiate.

I think that the purpose is to have everyone making sacrifice when the company is in trouble, not just the line employees.