RESPONDING TO ECONOMIC CRISES: PLANT CLOSINGS, RIFs AND BANKRUPTCY

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1 RESPONDING TO ECONOMIC CRISES: PLANT CLOSINGS, RIFs AND BANKRUPTCY ABA Section of Labor and Employment Law 2008 Annual CLE Conference Denver, Colorado Friday, September 12, 2008 David R. Jury Associate General Counsel United Steelworkers Five Gateway Center Pittsburgh, Pennsylvania SELECTED BANKRUPTCY ISSUES FOR LABOR LAWYERS

2 Labor lawyers on both the union and management sides are called upon increasingly to represent clients in corporate bankruptcy cases. The purpose of this outline is to review for labor lawyers certain issues that may arise in a business bankruptcy case. 1 I. Fundamentals A. Commencement of a Case A bankruptcy case is commenced by an employer filing a voluntary petition for relief. 11 U.S.C. 301(a). Creditors may also file an involuntary petition against an employer. 11 U.S.C. 303(a). Three creditors who have unsecured claims, which are neither disputed nor contingent, that total at least $12,300 are needed to file an involuntary petition. 11 U.S.C. 303(b)(1). B. Reorganization v. Liquidation An employer bankruptcy case will take the form of either a Chapter 7 case or a Chapter 11 case. Those chapters are found at Title 11 of the United States Code. Under Chapter 7, a trustee is appointed in order to liquidate debtor s assets. Upon liquidating those assets, the trustee will distribute the proceeds to creditors according to the priority scheme of the Bankruptcy Code. 11 U.S.C. 704(a)(1). For purposes of the NLRA, a trustee steps into the shoes of the debtor. See Yorke v. NLRB, 709 F.2d 1138, (7 th Cir. 1983) (Chapter 7 trustee had obligation to engage in effects bargaining). In addition, a Chapter 7 trustee assumes the duties of the administrator of any employee benefit plan that the debtor may have had prior to the bankruptcy filing. 11 U.S.C. 704(a)(12). The purpose of a Chapter 11 case is the restructuring of the debtor s business. In almost all cases, the employer assumes the status of the debtor-in-possession, which possesses the rights of the trustee, and operates the business subject to the Bankruptcy Code. 11 U.S.C. 1107, A Chapter 11 case is intended to result in the confirmation of a plan of reorganization, which is both a legal blueprint for both the resolution of claims against the debtor and a business plan addressing the rehabilitation of the business. However, a Chapter 11 case also may end in a going concern sale of assets or even liquidation. C. Union Participation in Bankruptcy Cases A union is a party in interest within the meaning of 11 U.S.C. 1109(b) and may appear on any matter in a Chapter 11 case. 1 The author thanks David Fusco of Schwarzwald, McNair and Fusco, LLC, Cleveland, Ohio, for permitting the author to draw upon an outline previously used in a training session in which the author and Mr. Fusco made a joint presentation.

3 In most Chapter 11 cases, the United States Trustee appoints an official committee of unsecured creditors. 11 U.S.C. 1102(a)(1), (b)(1). A creditor s committee has broad responsibilities relative to all aspects of the reorganization process. A union, in its representative capacity, is often one of the largest creditors and is entitled to be appointed to the creditors committee. In re Altair Airlines, Inc., 727 F.2d 88 (3d Cir. 1984); In re Plabell Rubber Products, 140 B.R. 179 (Bankr. N.D. Ohio 1992). While an employer or others may challenge the union s membership on a creditors committee on ground of an alleged conflict or lack of common interest with other creditors, such challenges are usually rejected. See In re Enduro Stainless, Inc., 59 B.R. 603, (Bankr. N.D. Ohio 1986). D. The Automatic Stay In general, all judicial and administrative litigation that had been or could have been commenced against the debtor prior to the petition date is automatically stayed upon the filing of the petition so that the debtor may bring all litigation in a single forum. 11 U.S.C. 362(a). Certain labor related proceedings have been held to be exempt from the automatic stay, including: 1. NLRB Unfair Labor Practice Proceedings. Unfair labor practice proceedings before the NLRB are exempted from the automatic stay because the NLRB is a governmental agency enforcing its regulatory powers. 11 U.S.C. 362(b)(4); NLRB v. Edward Cooper Painting, Inc., 804 F.2d 934, 939 (6 th Cir. 1986). The NLRB may proceed with the enforcement of non-monetary judgments as such enforcement is exempted from the automatic stay, although actions to enforce monetary judgments for wages and benefits are stayed. 2. Arbitration. Collectively bargained arbitral proceedings are not subject to the automatic stay on account of 11 U.S.C. 1113(f). See Ionosphere Clubs, Inc., 922 F.2d 984, 993 (2d Cir. 1990); ALPA v. Continental Airlines, 125 F.3d 120, (3d Cir. 1997); In re Fulton Bellows & Components, Inc., 307 B.R. 896 (Bankr. E.D. Tenn. 2004); In re Bunting Bearings, Inc., 302 B.R. 210 (Bankr. N.D. Ohio 2003); In re US Airways Group, Inc., 296 B.R. 734, (Bankr. E.D. Va. 2003); In re Bob s Supermarkets, Inc., 118 B.R. 783 (Bankr. D. Mont. 1990). Further, district court actions under Section 301 are not subject to the automatic stay. See Ionosphere Clubs, 922 F.2d at ; Continental Airlines, 125 F.3d at II. Bankruptcy Claims A. Asserting Claims Pre-petition claims may be asserted by filing a proof of claim 11 U.S.C. 501(a); Federal Rule of Bankruptcy Procedure ( FRBP ) 3001, Failure to file a timely claim may result in the claim being barred, absent a showing of excusable neglect. FRBP 9006(b)(1).

4 Objections to a proof of claim are litigated before the Bankruptcy Court. A union has standing to file a single proof of claim on behalf of all bargaining unit employees for obligations arising under a collective bargaining agreement. See U.S. Truck, Inc. v. Teamsters National Freight Indus. Negotiating Committee (In re U.S. Truck Co., Inc.), 89 B.R. 618, (E.D. Mich. 1988); In re Blue Diamond Coal Co., 147 B.R. 720, (Bankr. E.D. Tenn. 1992), appeal dismissed as moot, 160 B.R. 574 (E. D. Tenn. 1993); but see In re Continental Airlines Corp., 64 B.R. 874 (Bankr. S.D. Tex. 1986) (finding in the context of a Railway Labor Act that a union lacked such standing to file a single proof of claim). Only the NLRB may file a proof of claim for obligations relating to violations of the NLRA. In re Grosvenor Orlando Assocs., 178 L.R.R.M. (BNA) 2876 (Bankr. M.D. Fla. 2005). Post-petition claims are raised by the filing of a request for payment of administrative expenses. 11 U.S.C. 503(a). The Bankruptcy Court may allow the administrative expense claim after notice to the parties and a hearing. 11 U.S.C. 503(b). B. Priority Treatment of Wage and Benefit Claims The Bankruptcy Code sets forth a ladder of priorities in which claims are to be paid. Each rung on the ladder has its own rules and conditions. 1. Wages Wages and benefits earned after the filing of a bankruptcy petition are entitled to administrative expense priority. 11 U.S.C. 503(b)(1)(A) and 507(a)(2). Wages are treated as obligations earned in the ordinary course of business, are payable when due, and, unlike other administrative expenses, are not subject to disgorgement. See In re Vernon Sand & Gravel, Inc., 109 B.R. 255 (Bankr. N.D. Ohio 1989); In re Pacific Forest Industries, 95 B.R. 740 (Bankr. C.D. Cal. 1989). Pursuant to amendments to the Bankruptcy Code in 2005, wages earned within 180 days before the filing of the petition or the cessation of the debtor s business, whichever occurs first, are priority pre-petition claims entitled to fourth level priority status up to $10, U.S.C. 507(a)(4). Prior to these amendments, the pre-petition priority period was only 90 days. Characterizing a claim as a priority claim is important because in order for a court to confirm a plan of reorganization, the debtor must pay in full all priority claims unless the claimant agrees otherwise. 11 U.S.C. 1129(a)(9). Other wage claims earned more than 180 days before the petition date or exceeding $10,000 are general unsecured claims not entitled to priority.

5 2. Vacation Claims Vacation claims are addressed under the same priority scheme as wage claims. However, there often is a dispute as to when vacation claims are considered to be earned. Vacation is usually found to be earned throughout the year, and an employee thus receives Section 507(a)(4) priority treatment for one-half of the accrued vacation claim. See Matter of Northwest Engineering Co., 863 F.2d 1313 (7 th Cir. 1988); In re Ground Round, Inc., 316 B.R. 423 (Bankr. D. Mass. 2004); but see In re Valley Concrete Corp., 118 B.R. 174, 175 (Bankr. D. R.I. 1990) (finding that vacation pay is deemed earned when the employee took the vacation). 3. Severance Pay Majority Rule. Where severance is paid in lieu of notice, such obligations are entitled to administrative expense status where the closure occurs after the petition date. Hechinger Inv. Co. of Delaware, 298 F.3d 219, 227 (3d Cir. 2002). Where, however, severance is calculated based upon length of service, the portion of the severance pay accorded administrative expense status is determined based upon the years of service for the debtor-employer, which often leads to a particularly small portion of the obligation being treated as an administrative expense claim. See In re Mammoth Mart, Inc., 536 F.2d 950, 955 (1 st Cir. 1976); In re Roth American, 975 F.2d 949, 957 (3d Cir. 1990). Minority Rule. The Second Circuit has held that severance pay arising from a postpetition termination is entitled to administrative expense status, even if the obligation is calculated based upon years of service. Straus-Duparquet, Inc. v. Local 3, IBEW, 386 F.2d 649, 651 (2d Cir. 1967); In re W.T. Grant Co., 620 F.2d 319 (2d Cir. 1980); accord In re Landmark Land Co. of Oklahoma, Inc., 136 B.R. 410 (Bankr. D. S.C. 1992). 4. Employee Benefit Claims Post-petition employee benefit plan claims are accorded administrative expense status. In re Sunarhauserman, Inc., 126 F.3d 811 (6 th Cir. 1997); In re Sharon Steel Corp., 161 B.R. 934, (Bankr. W.D. Pa. 1994). Pursuant to the 2005 amendments to the Bankruptcy Code, pre-petition employee benefit claims arising from services rendered within 180 days prior to the filing of the petition or the cessation of business, whichever occurs first, are entitled to fifth level priority. 11 U.S.C. 507(a)(5). Prior to 2005, the pre-petition priority period was only 90 days. The amount of a claim entitled to the 507(a)(5) priority is limited to $10,000 multiplied by the number of employees covered by the plant, less the aggregate amount paid to those employees under 507(a)(4). 11 U.S.C. 507(a)(5)(B)(i). Employee benefit plan claims entitled to priority under Section 507(a)(5) include: reimbursement of employee medical expenses under self-insured plans; fees charged for administering an employee medical benefit plan; and premiums to due an insurance company that provided coverage to a debtor s employees.

6 5. Priority of Certain Statutory Claims NLRB Claims: An NLRB back pay remedy for failing to engage in effects bargaining may be entitled to priority depending upon when the violation occurred. Yorke v. NLRB, 709 F.2d 1138 (7 th Cir. 1983) (administrative expense); Matter of Tucson Yellow Cab Co., Inc., 789 F.2d 701 (9 th Cir. 1986) (same); In re Sher-Del Foods, Inc., 186 B.R. 358 (Bankr. W.D. N.Y. 1995) (pre-petition priority). An NLRB or judicial backpay award attributable to any post-petition period is entitled to administrative expense status, regardless of when the unlawful activity occurred, if the court determines that the payment of the award will not substantially increase the likelihood that current employees will be laid off. 11 U.S.C. 503(b)(1)(A)(ii). WARN Claims: Damages on account of a post-petition violation of the WARN Act are entitled to administrative expense status. In re Hanlin Group, Inc., 176 B.R. 329 (Bankr. D. N.J. 1995). Further, damages on account of a pre-petition violation are entitled to priority treatment to the extent that the violation occurred within the 180 day period of Section 507(a)(4). In re Riker Indus., Inc., 151 B.R. 823 (Bankr. N.D. Ohio 1993). III. Treatment of Collective Bargaining Agreements Congress included as part of the Bankruptcy Amendments and Federal Judgeship Act of 1984 a new provision Section 1113 which sets forth the substantive and procedural standards governing collective bargaining agreements in chapter 11 cases. Section 1113 of the Bankruptcy Code, 11 U.S.C. 1113, provides the exclusive means by which a debtor-inpossession or a trustee may assume or reject a collective bargaining agreement. 11 U.S.C. 1113(a); see also Chicago District Council of Carpenters Pension Fund v. Cotter, 914 F. Supp. 237, 242 (N.D. Ill. 1996) (attempted rejection of collective bargaining agreement through plan of reorganization is ineffective). By rejecting a collective bargaining agreement, a debtor-inpossession is granted the authority to breach the agreement. A. Standards Applicable To Application For Relief Under Section The standards applicable to a debtor s application for relief under Section 1113 are set forth in Sections 1113(b) and (c), 11 U.S.C. 1113(b), (c). Courts often refer to the nine part test set forth by the court in In re American Provision, 44 B.R. 907 (Bankr. D. Minn. 1984), which described the requirements, as follows: The debtor-in-possession must make a proposal to the union to modify the collective bargaining agreement. The proposal must be based on the most complete and reliable information available at the time of the proposal. The proposed modifications must be necessary to permit the reorganization of the debtor.

7 The proposed modifications must assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably. The debtor must provide the union with such relevant information as is necessary to evaluate the proposal. Between the time of the making of the proposal and the time of the hearing on approval of the rejection of the existing collective bargaining agreement, the debtor must meet at reasonable times with the union. The debtor must confer in good faith in attempting to reach mutually satisfactory modifications of the collective bargaining agreement. The Union must have refused to accept the proposal without good cause. The balance of the equities must clearly favor rejection of the collective bargaining agreement. A debtor-in-possession must comply with each of the requirements of Sections 1113(b) and (c), or a motion for relief must be denied. See e.g., In re U.S. Truck Co. Holdings, Inc., 165 L.R.R.M. (BNA) 2521, 2530 (Bankr. E.D. Mich. 2000) (rejection denied where debtor s proposal failed the necessary and fair and equitable requirements and where the debtor failed to meet and confer in good faith); In re The Lady H Coal Co., Inc., 193 B.R. 233 (Bankr. S.D. W. Va. 1996) (rejection denied where debtor s proposal did not meet the fair and equitable requirement); In re George Cindrich Gen. Contracting, Inc., 130 B.R. 20, (Bankr. W.D. Pa. 1991) (rejection denied where debtor did not meet the statutory requirements to provide adequate information); In re Express Freight Lines, 119 B.R. 1006, 1011 (Bankr. E.D. Wis. 1990) (rejection denied where proposal did not meet the necessary requirement); In re William P. Brogna & Co., 64 B.R. 390, 391 (Bankr. E.D. Pa. 1986) (rejection denied where proposal did not meet necessary requirement); In re Horsehead Indus., Inc., 300 B.R. 573, 588 (Bankr. S.D. N.Y. 2003) (rejection denied where a debtor refused to meet with the union in connection with the application to reject a collective bargaining agreement covering a single plant, even though the court granted the debtor s application for relief with respect to two other collective bargaining agreements between the debtor and the same international union). 1. Common Issues In Section 1113 Litigation. A frequently litigated question is whether the proposed modifications are necessary to reorganization. The Third Circuit, in Wheeling Pittsburgh Steel Corporation v. United Steelworkers, 791 F.2d 1074, (3d Cir. 1986), adopted a stringent interpretation of the standard, requiring a debtor to establish that the modifications are necessary to prevent liquidation. On the other hand, the Second Circuit, in Truck Driver Local 807 v. Carey Transportation, 816 F.2d 82, (2d Cir. 1987), adopted a more relaxed standard, requiring a debtor merely to prove that the modifications are necessary to enable a successful reorganization. Most lower courts have tended to follow the Carey Transportation standard.

8 Another issue often litigated is equality of sacrifice, including whether a debtor has reduced the wages and benefits of management and non-organized employees. Some courts have been willing to deny Section 1113 applications where there is evidence of disparate treatment. In re Pierce Terminal Warehouse, Inc., 133 B.R. 639, 648 (Bankr. N.D. Iowa 1991); In re Indiana Grocery Co., Inc., 139 B.R. 182, 195 (Bankr. S.D. Ind. 1990); In re Jefley, Inc., 219 B.R. 88, 93 (Bankr. E.D. Pa. 1998). Other courts have refused to deny relief on this basis. Carey Transp., 816 F.2d at Interim Relief A debtor may obtain interim relief from its collective bargaining agreement if essential to the continuation of [its] business or in order to avoid irreparable damage to the estate, and may implement interim changes to its collective bargaining agreements. 11 U.S.C. 1113(e). Relief granted under Section 1113(e) is effective only until a decision is rendered on a pending Section 1113(b) motion. Carey Transp., Inc., 816 F.2d at 89; In re Ionosphere Clubs, Inc., 139 B.R. 772, (S.D. N.Y. 1992). Unsubstantiated claims concerning the need for emergency contractual modifications are an insufficient basis for the grant of interim relief. See e.g., In re Wright Air Lines, Inc., 44 B.R. 744, 745 (Bankr. N.D. Ohio 1984). One court has described a debtor s obligation under Section 1113(e), as follows: a debtor seeking interim relief must show a more immediate level of economic emergency than it would need to show as support for an application for rejection.... [I]nterim changes may only be authorized if the evidence establishes that, without such changes, the company will collapse and the employees will no longer have their jobs. In re Salt Creek Freightways, 46 B.R. 347, 350 (Bankr. D. Wyo. 1985). Where a debtor has already determined to shut its operations, at least one court has denied an application for interim relief under Section 1113(e) as the relief sought could not, by defined, have preserved the debtor s operations. In re Cedar Rapids Meats, Inc., 117 B.R. 448, 451 (Bankr. N.D. Iowa 1990). 3. Consensual Resolution Of Application Section 1113(b)(2) contemplates that a debtor and a union may consensually resolve an application for relief short of litigating the matter. A debtor may ask the court to authorize it to modify its collective bargaining agreements consistent with the standards of Section 363(b)(1) of the Bankruptcy Code, 11 U.S.C. 363(b)(1), which asks merely whether the decision to modify the agreements is within the debtor s sound business judgment. 4. Assumption of Collective Bargaining Agreements A collective bargaining agreement, like other executory contracts, may be assumed consistent with the provisions of Section 365(a) of the Code, 11 U.S.C. 365(a). A debtor that assumes an executory contract must pay in full all amounts owing thereunder. 11 U.S.C. 365(b).

9 There is a split in authority as to whether the failure of a debtor to pursue the rejection of a collective bargaining agreements automatically deems the debtor to have assumed the agreement. See In re Family Snacks, Inc., 257 B.R. 884, (B.A.P. 8 th Cir. 2001); Massachusetts Air Conditioning and Heating, Co., 196 B.R. 659, (D. Mass. 1996) (both cases finding that a failure to reject a CBA did not deem it to have been assumed); but see In re Adventure Resources, 137 F.3d 786, 798 (4 th Cir. 1998) (finding that a failure to reject a CBA led to the conclusion that the debtor was deemed to have assumed the agreement). 5. Treatment Of Obligations Arising Out Of An Unrejected Collective Bargaining Agreement. The Sixth Circuit, applying Section 1113(f) of the Code, which provides that [n]o 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, has held that obligations arising under an unrejected labor agreement are entitled to a superpriority status. In re Unimet, 842 F.2d 879 (6 th Cir. 1988); In re WCI Steel, Inc., 313 B.R. 414 (Bankr. N.D. Ohio 2004) (collecting cases citing Unimet); accord Eagle, Inc. v. Pipefitters, Local No. 537, 198 B.R. 637 (D. Mass. 1996). Other courts have rejected the Unimet proposition. In re Ionosphere Clubs, 22 F.3d 403 (2d Cir. 2004); In re Roth American, 975 F.2d 949 (3d Cir. 1993); In re Adventure Resources, 137 F.3d at ; Peters v. Pikes Peak Musicians Ass n, 462 F.3d 1265 (10 th Cir. 2006). B. Effect Of Rejection Of A Collective Bargaining Agreement A union has a right to strike following the granting of an application for rejection and the debtor s implementation of modifications to the labor agreements. Briggs Transp. Co. v. International Bhd. of Teamsters, 739 F.2d 341, 344 (8th Cir. 1984) (rejecting employer's request for injunctive relief against union picketing after rejection); In re Royal Composing Room, Inc., 62 B.R. 403, 405 (Bankr. S.D.N.Y. 1986), aff'd, 78 B.R. 671 (S.D.N.Y. 1987), aff'd, 848 F.2d 345 (2d Cir. 1988); In re Evans Prods. Co., 55 B.R. 231, 234 (Bankr. S.D. Fla. 1985); In re Kentucky Truck Sales, Inc., 52 B.R. 797, 806 (Bankr. W.D. Ky. 1985). However, the Second Circuit has held, in the context of the Railway Labor Act, that the right to strike is limited by the provisions of the RLA. Northwest Airlines Corp. v. Flight Attendants, 483 F.3d 160 (2d Cir. 2007). An employer has a duty to bargain in good faith pursuant to Section 8(a)(5) after obtaining relief pursuant to Section 1113(f). See Mile Hi Metals Systems, Inc., 295 NLRB 877 (1989). The rejection of a collective bargaining agreement gives rise to a rejection damages claim, which is treated as a pre-petition general unsecured claim. 11 U.S.C. 365(g). There is a split in authority as to whether a union is entitled to assert a damages claim following the rejection of a collective bargaining agreement. In re U.S. Truck Co., 89 B.R. 618, (E.D. Mich. 1988) (allowing a claim); In re Blue Diamond Coal Co., 147 B.R. 720 (Bankr. E.D. Tenn. 1992), appeal dismissed as moot, 160 B.R. 574 (E.D. Tenn. 1993) (denying a claim).

10 IV. Treatment Of Retiree Insurance Benefits Congress amended the Bankruptcy Code in 1988, adding Section 1114, to govern the treatment of retiree benefits in Chapter 11 cases. A. Applicability For purposes of Section 1114, the term retiree benefits means payments to any entity or person made for the purpose of providing or reimbursing payments for retired employees and their spouses and dependents in connection with medical, surgical, or hospital benefits, or benefits in the event of sickness, accident, disability or death provided under any plan, fund or program (through the purchase of insurance or otherwise) maintained or established in whole or in party by the debtor prior to the filing of a Chapter 11 petition. 11 U.S.C. 1114(a). The broad definition of retiree benefits found in Section 1114(a) covers any medical, sickness, accident, or death benefit provided to retirees, spouses and dependents, whether such benefits are self-insured or insured. The term retiree benefits, however, excludes pension benefits. Section 1114 applies to liquidating as well as reorganizing chapter 11 cases. In re Horizon Natural Resources Co., 316 B.R. 268, (Bankr. E.D. Ky. 2004). Section 1114 excludes from coverage any retiree whose gross income for the twelve months preceding the filing of the bankruptcy petition equals or exceeds $250,000, unless the retiree can demonstrate that he or she is unable to obtain health, medical, life and disability coverage for the retiree, his or her spouse and dependents, comparable to the coverage provided by the employer. 11 U.S.C. 1114(m). Where a debtor has the right under the applicable agreements or plan documents to amend, modify or terminate retiree benefits unilaterally, most courts have found that a debtor is not obligated to avail itself of Section 1114 in order to modify retiree benefits. In re North American Royalties, Inc., 276 B.R. 860 (Bankr. E.D. Tenn. 2002); In re CF&I Fabricators of Utah, Inc., 163 B.R. 858, 874 (Bankr. D. Utah 1994); In re Doskocil Companies, Inc., 130 B.R. 870 (Bankr. D. Kan. 1991); but see In re Farmland Industries, Inc., 294 B.R. 803 (Bankr. W.D. Mo. 2003) (obligating a debtor to comply with Section 1114 regardless of whether the debtor has the right under applicable plan documents to modify the benefits). B. Payment Obligations A debtor is required to timely pay and not modify any retiree benefits except where it has obtained bankruptcy court authorization or the agreement of the retirees. 11 U.S.C. 1114(e)(1). Any payment required to be made relative to retiree benefits shall have the status of allowed administrative expenses. 11 U.S.C. 1114(e)(2). However, a debtor may not be required to use assets encumbered by a secured claim to pay retiree benefits. In re GF Corp., 115 B.R. 579, 583-

11 84 (Bankr. N. D. Ohio), vacated in part to comply with settlement, 120 B.R. 421 (Bankr. N.D. Ohio 1990), appeal dismissed, 140 B.R. 884 (N.D. Ohio 1992); In re Jones & Lamson Machine Co., Inc., 102 B.R. 12 (Bankr. D. Conn. 1989). C. Representation of Retirees Section 1114(b) sets forth that where a debtor wishes to modify its retiree benefits programs, it must deal with the authorized representative of the affected retirees. 11 U.S.C. 1114(b). For retirees whose benefits are provided pursuant to a collective bargaining agreement, the labor organization that had negotiated the agreement is deemed to be the authorized representative of such retirees unless the labor organization elects not to serve as the representative or where the court, upon notice and hearing, finds that different representation is appropriate. 11 U.S.C. 1114(c)(1). Where the retiree benefits programs are not provided through a collective bargaining agreement i.e., for management or non-organized retirees or where the labor organization opts not to serve as the authorized representative or the court finds that different representation is appropriate, the court will establish a committee to represent the interests of such persons. 11 U.S.C (c)(2), (d). The appointment of a committee is appropriate only where the debtor seeks to modify retiree benefits. In re Anchor Glass Container Corp., 342 B.R. 878 (Bankr. M.D. Fla. 2005). Pursuant to the 2005 Bankruptcy Code amendments, the United States Trustee now appoints the members of a Section 1114 retiree committee. 11 U.S.C. 1114(d). Retirees represented either by a union or a retiree committee are bound by any settlement entered into by the authorized representative and the debtor. In re Erie Forge & Steel, Inc., 418 F.3d 270, (3d Cir. 2005); Argeras v. GF Corp., 140 B.R. 884 (N.D. Ohio 1992), appeal dismissed, 996 F.2d 1215 (table), 1993 WL (6 th Cir. 1993). D. Modification Of Retiree Benefits If the debtor and the authorized representative are unable to reach an agreement to modify retiree benefits, the debtor may apply for court authorization to do so. 11 U.S.C. 1114(f), (g). The substantive and procedural requirements of Section 1114 mirror those of Section A debtor may apply for an order authorizing the interim modification of retiree benefits while an application authorizing modification pursuant to Section 1114(g) is pending. 11 U.S.C. 1114(h).

12 After a court has entered an order authorizing the modification of retiree benefits, the authorized representative may apply for an order seeking to improve the programs in light of changed circumstances. 11 U.S.C. 1114(g). A debtor may make one or more applications to modify retiree benefits, and an authorized representative may also make more than one application to improve the programs. Where an employer had modified retiree benefits within 180 days prior to the filing of a bankruptcy petition, and where the employer was insolvent on the date of modification, the Bankruptcy Court, on motion, may order the reinstatement of benefits, unless the balances of equities clearly favors modification. 11 U.S.C. 1114(l). As a condition of confirmation, a plan of reorganization must provide for the continuation of any retiree benefits at the level established through the Section 1114 process. 11 U.S.C. 1129(a)(13).