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REJECTION OF COLLECTIVE BARGAINING
AGREEMENTS:
The rejection of a collective bargaining agreement may be an
important consideration in the debtor's effort to reorganize
[National Labor Relations Board v. Bildisco & Bildisco, 465 U.S. 513
(1984)], and it is governed by a different standard than other kinds
of executory contracts in a Chapter 11 case. [B.C. §1113]
1. Prerequisites for Rejection: Court approval of an
application to reject a collective bargaining agreement requires
that the debtor in possession (or the trustee, if one has been
appointed) prove the following nine elements:
(i) "The debtor in possession must make a proposal to the Union to
modify the
collective bargaining agreement." [B.C. §1113(b)(l)(A)]
(ii) "The proposal must be based on the most complete and reliable
information
available at the time of the proposal." [B.C. §1113(b)(l) (A)]
(iii) "The proposed modifications must be necessary to permit the
reorganization of the debtor." [B.C. §1113(b)(l) (A)]
(iv) "The proposed modifications must assure that all creditors, the
debtor, and all of the affected parties are treated fairly and
equitably." [B.C. §1113(b)(l) (A)].
(v) "The debtor must provide to the Union such relevant information
as is necessary to evaluate the proposal." [B.C. §1113(b)(l) (B)]
Note: These first five elements must occur after the filing of the
Chapter 11 petition and before the filing of the application to
reject. [B.C. §1113(b)
(vi) "Between the time of the making of the proposal and the lime of
the hearing on approval of the rejection of the existing collective
bargaining agreement, the debtor must meet at reasonable times with
the Union."
(vii) "At the meetings the debtor must confer in good faith in
attempting to reach mutually satisfactory modifications of the
collective bargaining agreement."
(viii) "The Union must have refused to accept the proposal without
good cause. "
(ix) "The balance of the equities must clearly favor rejection of
the collective bargaining agreement."
2. Hearing: A hearing on an application lo reject a
collective bargaining agreement must be scheduled lo occur within
fourteen days after the application is filed, and the court must
rule on (he issue within thirty days after the commencement of I he
hearing. [B.C. §1113(d)]
3. Interim Change: The court may permit (he debtor in
possession or Trustee to make temporary interim modifications in the
terms of a collective bargaining, agreement when such changes are
necessary to continue the debtor's business or to avoid irreparable
harm to the estate. Notice and a hearing are required.
4. Unilateral Action Prohibited: The debtor in possession or
trustee may not unilateral terminate or modify any terms of a
collective bargaining agreement before. compliance with the
provisions set forth in section 1113
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Chapter 7&13
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and not paid directly to the attorney. Court filing fee is
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