Rejection Of A Collective Bargaining Agreement

In re Trump Entm`t Resorts UNITE HERE Local 54, 810 F.3d 161 (3d Cir. 2016), the U.S. Court of Appeals for the Third Circuit responded to an obvious first impression question among the appelal courts by deciding that Section 1113 of the Bankruptcy Act allowed a trustee in bankruptcy or a Chapter 11 debtor (”DIP”) to refuse a collective agreement (”CBA”) even after the contract expired. The lower courts disagree on whether such terminated contracts may be refused or whether the expiring conditions of an expired CBA will remain in effect until a new contract is executed. 11 U.S.C 1113, ”Refusal of Collective Agreements,” codified the circumstances under which collective agreements may be rejected in Chapter 11 of bankruptcy. When a company attempts to refuse or amend a collective agreement under Chapter 11 of the U.S. Bankruptcy Act, the Bankruptcy Act, titled Refusal of Collective Agreements, clarifies the circumstances under which such agreements may be refused. Sections 1113 (b) and (c) generally require the following measures: the courts have recognized workers` right to strike in situations where debtors have received orders to refuse collective agreements under .1113, except that an arbitration agreement may be applied by default if the underlying collective agreement has a mandatory appeal procedure and the strike is triggered by matters subject to that mandatory arbitration procedure. During the bankruptcy proceedings, a debtor who wishes to reorganize will often attempt to refuse unfavourable contracts to ensure that the debtor can make the new start that the Chapter 11 procedure must allow. The denial of pre-game contracts is governed by Chapter 11 of Chapter 11 of Title 11 of the U.S. Code (the ”bankruptcy code”), with one exception.

A collective agreement between the debtor and a workers` union may only be refused or amended in one case under Chapter 11, in accordance with the strict requirements of section 1113 of the bankruptcy code. Conditions not affected by the debtor`s proposal of 1113 must not be unilaterally changed without exhausting the bargaining requirements of the NRAA. On March 7, 2014, TER announced to the union its ”intention to terminate, modify or modify the CBA” and asked the union to begin negotiations for a new agreement. The union did not respond. On April 10, 2014, the TER reiterated its request. The union replied on 30 April: ”While [it] is also concerned about starting negotiations, the Union is simply not prepared to enter into negotiations about five months after the expiration of the CBA,” but it would ”make contact in the coming months.” The balance sheet of the actions clearly favours the rejection of the collective agreement. The third arrondissement strongly rejected the union`s argument that a section 1113 refusal would be unreasonable because a debtor could not refuse an expired enforcement contract under Section 365 of the Bankruptcy Act. This allegation, the court wrote, ”ignores an important distinction” between a CBA and any other performance contract. Namely, the court said, ”the main conditions of a CBA continue to weigh on the debtor after the expiry of the agreement.

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