Protecting Employees and Retirees in Business Bankruptcies Act of 2025

Increased Wage Priority: The bill increases the priority level for wages and changes the timing for when severance pay is considered earned, which can help workers get paid more quickly during bankruptcy (Section 101).

Stock Value Protections: Employees can now have a claim for losses in equity securities held in defined contribution plans if the employer committed fraud or breached a duty (Section 102).

Enhanced Severance and Benefit Priority: Severance pay and contributions to employee benefit plans are granted priority status to help ensure these funds are available to workers (Section 103).

Legal Protection for Damages: The bill adds protections for back pay, civil penalties, or damages related to violations of labor laws, including the WARN Act (Section 105).

Stronger Collective Bargaining Protections: The bill creates a higher standard for courts to reject collective bargaining agreements, requiring "clear and convincing evidence" and ensuring that changes do not cause a material loss in purchasing power (Section 201).

Improved Retiree Protections: Trustees seeking to modify retiree benefits must now follow a stricter process of good faith negotiation and provide more information to authorized representatives (Section 202).

Job and Benefit Preservation in Asset Sales: When a company sells its assets, the court is directed to give substantial weight to purchasers who intend to preserve jobs, maintain employment terms, and match pension and health benefits (Section 203).

Pension Loss Claims: The bill allows for claims regarding shortfalls in pension benefits caused by the termination of a plan (Section 204).

Recovery of Unpaid Obligations from Secured Lenders: If employees are owed wages or benefits after a bankruptcy filing, those obligations can be recovered from secured lenders (Section 205).

Job Preservation Mandate: The bill establishes that the principal purpose of a reorganization should be to preserve jobs and productive economic activity (Section 206).

Easier Access to Disputes: The bill allows for the continuation of grievances and arbitration proceedings despite the automatic stay in bankruptcy (Section 402).

Restrictions on Executive Compensation: The bill places heavy limitations and requirements for court approval on payments made to insiders, senior executives, and high-compensated employees (Section 301, 302, and 303).

Prohibition of Certain Benefits: The bill prevents the assumption of certain deferred compensation or retiree benefit plans if the company has recently reduced benefits for the general workforce (Section 304).

Risk of Compensation Recovery: Executives may face the recovery of compensation already paid if the company has reduced the benefits of its employees or retirees (Section s 305).

Increased Scrutiny on Transfers: Transfers to insiders or high-compensated employees made shortly before a bankruptcy filing can be avoided or recovered by a trustee (Section 306).