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U.S. Code as of:
01/19/04
Section 1114. Payment of insurance benefits to retired employees
(a) For purposes of this section, the term "retiree benefits"
means payments to any entity or person for the purpose of providing
or reimbursing payments for retired employees and their spouses and
dependents, for medical, surgical, or hospital care benefits, or
benefits in the event of sickness, accident, disability, or death
under any plan, fund, or program (through the purchase of insurance
or otherwise) maintained or established in whole or in part by the
debtor prior to filing a petition commencing a case under this
title.
(b)(1) For purposes of this section, the term "authorized
representative" means the authorized representative designated
pursuant to subsection (c) for persons receiving any retiree
benefits covered by a collective bargaining agreement or subsection
(d) in the case of persons receiving retiree benefits not covered
by such an agreement.
(2) Committees of retired employees appointed by the court
pursuant to this section shall have the same rights, powers, and
duties as committees appointed under sections 1102 and 1103 of this
title for the purpose of carrying out the purposes of sections 1114
and 1129(a)(13) and, as permitted by the court, shall have the
power to enforce the rights of persons under this title as they
relate to retiree benefits.
(c)(1) A labor organization shall be, for purposes of this
section, the authorized representative of those persons receiving
any retiree benefits covered by any collective bargaining agreement
to which that labor organization is signatory, unless (A) such
labor organization elects not to serve as the authorized
representative of such persons, or (B) the court, upon a motion by
any party in interest, after notice and hearing, determines that
different representation of such persons is appropriate.
(2) In cases where the labor organization referred to in
paragraph (1) elects not to serve as the authorized representative
of those persons receiving any retiree benefits covered by any
collective bargaining agreement to which that labor organization is
signatory, or in cases where the court, pursuant to paragraph (1)
finds different representation of such persons appropriate, the
court, upon a motion by any party in interest, and after notice and
a hearing, shall appoint a committee of retired employees if the
debtor seeks to modify or not pay the retiree benefits or if the
court otherwise determines that it is appropriate, from among such
persons, to serve as the authorized representative of such persons
under this section.
(d) The court, upon a motion by any party in interest, and after
notice and a hearing, shall appoint a committee of retired
employees if the debtor seeks to modify or not pay the retiree
benefits or if the court otherwise determines that it is
appropriate, to serve as the authorized representative, under this
section, of those persons receiving any retiree benefits not
covered by a collective bargaining agreement.
(e)(1) Notwithstanding any other provision of this title, the
debtor in possession, or the trustee if one has been appointed
under the provisions of this chapter (hereinafter in this section
"trustee" shall include a debtor in possession), shall timely pay
and shall not modify any retiree benefits, except that -
(A) the court, on motion of the trustee or authorized
representative, and after notice and a hearing, may order
modification of such payments, pursuant to the provisions of
subsections (g) and (h) of this section, or
(B) the trustee and the authorized representative of the
recipients of those benefits may agree to modification of such
payments,
after which such benefits as modified shall continue to be paid by
the trustee.
(2) Any payment for retiree benefits required to be made before a
plan confirmed under section 1129 of this title is effective has
the status of an allowed administrative expense as provided in
section 503 of this title.
(f)(1) Subsequent to filing a petition and prior to filing an
application seeking modification of the retiree benefits, the
trustee shall -
(A) make a proposal to the authorized representative of the
retirees, based on the most complete and reliable information
available at the time of such proposal, which provides for those
necessary modifications in the retiree benefits that are
necessary to permit the reorganization of the debtor and assures
that all creditors, the debtor and all of the affected parties
are treated fairly and equitably; and
(B) provide, subject to subsection (k)(3), the representative
of the retirees with such relevant information as is necessary to
evaluate the proposal.
(2) During the period beginning on the date of the making of a
proposal provided for in paragraph (1), and ending on the date of
the hearing provided for in subsection (k)(1), the trustee shall
meet, at reasonable times, with the authorized representative to
confer in good faith in attempting to reach mutually satisfactory
modifications of such retiree benefits.
(g) The court shall enter an order providing for modification in
the payment of retiree benefits if the court finds that -
(1) the trustee has, prior to the hearing, made a proposal that
fulfills the requirements of subsection (f);
(2) the authorized representative of the retirees has refused
to accept such proposal without good cause; and
(3) such modification is necessary to permit the reorganization
of the debtor and assures that all creditors, the debtor, and all
of the affected parties are treated fairly and equitably, and is
clearly favored by the balance of the equities;
except that in no case shall the court enter an order providing for
such modification which provides for a modification to a level
lower than that proposed by the trustee in the proposal found by
the court to have complied with the requirements of this subsection
and subsection (f): Provided, however, That at any time after an
order is entered providing for modification in the payment of
retiree benefits, or at any time after an agreement modifying such
benefits is made between the trustee and the authorized
representative of the recipients of such benefits, the authorized
representative may apply to the court for an order increasing those
benefits which order shall be granted if the increase in retiree
benefits sought is consistent with the standard set forth in
paragraph (3): Provided further, That neither the trustee nor the
authorized representative is precluded from making more than one
motion for a modification order governed by this subsection.
(h)(1) Prior to a court issuing a final order under subsection
(g) of this section, if essential to the continuation of the
debtor's business, or in order to avoid irreparable damage to the
estate, the court, after notice and a hearing, may authorize the
trustee to implement interim modifications in retiree benefits.
(2) Any hearing under this subsection shall be scheduled in
accordance with the needs of the trustee.
(3) The implementation of such interim changes does not render
the motion for modification moot.
(i) No retiree benefits paid between the filing of the petition
and the time a plan confirmed under section 1129 of this title
becomes effective shall be deducted or offset from the amounts
allowed as claims for any benefits which remain unpaid, or from the
amounts to be paid under the plan with respect to such claims for
unpaid benefits, whether such claims for unpaid benefits are based
upon or arise from a right to future unpaid benefits or from any
benefits not paid as a result of modifications allowed pursuant to
this section.
(j) No claim for retiree benefits shall be limited by section
502(b)(7) of this title.
(k)(1) Upon the filing of an application for modifying retiree
benefits, the court shall schedule a hearing to be held not later
than fourteen days after the date of the filing of such
application. All interested parties may appear and be heard at such
hearing. Adequate notice shall be provided to such parties at least
ten days before the date of such hearing. The court may extend the
time for the commencement of such hearing for a period not
exceeding seven days where the circumstances of the case, and the
interests of justice require such extension, or for additional
periods of time to which the trustee and the authorized
representative agree.
(2) The court shall rule on such application for modification
within ninety days after the date of the commencement of the
hearing. In the interests of justice, the court may extend such
time for ruling for such additional period as the trustee and the
authorized representative may agree to. If the court does not rule
on such application within ninety days after the date of the
commencement of the hearing, or within such additional time as the
trustee and the authorized representative may agree to, the trustee
may implement the proposed modifications pending the ruling of the
court on such application.
(3) The court may enter such protective orders, consistent with
the need of the authorized representative of the retirees to
evaluate the trustee's proposal and the application for
modification, as may be necessary to prevent disclosure of
information provided to such representative where such disclosure
could compromise the position of the debtor with respect to its
competitors in the industry in which it is engaged.
(l) This section shall not apply to any retiree, or the spouse or
dependents of such retiree, if such retiree's gross income for the
twelve months preceding the filing of the bankruptcy petition
equals or exceeds $250,000, unless such retiree can demonstrate to
the satisfaction of the court that he is unable to obtain health,
medical, life, and disability coverage for himself, his spouse, and
his dependents who would otherwise be covered by the employer's
insurance plan, comparable to the coverage provided by the employer
on the day before the filing of a petition under this title.
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