Union Rights Under Chapter 11 Bankruptcy

Parties in a bankruptcy case have differing interests.

When a business files for Chapter 11 bankruptcy reorganization, creditors and other interested parties have different interests in the case. Creditors have the right to file a claim to protect their accounts. A labor union has the right to protect such things as an employee pension plan.

Function

The function of a Chapter 11 bankruptcy is to reorganize a business and restructure its debt to keep the entity in operation.

Considerations

Some businesses have pension funds that include contributions from the business, from employees and even from unions. A union has the right to participate in decisions regarding the impact that the reorganization potentially has on pension matters.

Time Frame

A union with members employed by the business in a Chapter 7 bankruptcy has the ability to be involved in the case from the date of filing until the final discharge of the debts in the case.

Misconceptions

A common misconception is that only creditors of a business have rights to participate in a Chapter 11 reorganization.

Warning

Chapter 11 bankruptcies are complex. Therefore, not only should the business in bankruptcy engage legal representation but other interested parties--including labor unions--should do the same.

References

• "The Glannon Guide to Bankruptcy: Guide to Bankruptcy;" Nathalie Martin; 2006
• Cornell University Law School: Bankruptcy Overview
• Cornell University Law School: U.S. Bankruptcy Code

Resources

• American Bar Association: Bankruptcy & Insolvency Litigation Committee