Protecting Employees and Retirees in Business Bankruptcies Act of 2025
Sponsored By: Senator Richard Durbin
Introduced
Summary
Elevates priority for wages, severance, and retiree benefits in bankruptcy. The bill would shift more money toward workers and retirees in corporate reorganizations while tightening rules for executives and forcing structured bargaining with labor.
Show full summary
- Employees and retirees: Workers would get a higher per-employee wage priority of $20,000 and severance owed on layoff would be deemed earned. Retiree benefits must be maintained at plan levels and participants gain new claims for pension and defined-contribution losses.
- Labor organizations and collective bargaining: Labor groups would be recognized as creditors and could pursue grievances and arbitration despite an automatic stay. Companies would face a required, time‑limited negotiation process (including a 21‑day window) before courts could permit rejection of a collective bargaining agreement.
- Executives and corporate process: The bill would restrict recent special payments and exit compensation for insiders, create new avoidance and recovery rules for transfers to top officers, and require courts to prefer plans and sales that preserve jobs and going‑concern value.
Your PRIA Score
Personalized for You
How does this bill affect your finances?
Sign up for a PRIA Policy Scan to see your personalized alignment score for this bill and every other piece of legislation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.
Bill Overview
Analyzed Economic Effects
5 provisions identified: 5 benefits, 0 costs, 0 mixed.
Higher pay and severance priority
If enacted, the bill would raise per-employee bankruptcy priority amounts to $20,000. For each employee plan, the priority would equal $20,000 times the number of covered employees. Severance owed after a case starts would count as earned when you are laid off or fired. Contributions to benefit plans due on or after the petition date would be treated as top-priority administrative costs. Wages and benefit contributions earned after a case starts could be recovered as costs tied to secured property, even if previously waived.
Stronger bankruptcy claims for retirees
If enacted, participants and retirees could file larger claims in bankruptcy for pension shortfalls when a defined benefit plan is terminated under ERISA. If employer fraud or breach caused stock losses in a 401(k)-type plan, affected participants could claim the drop in market value from contribution to case start. For multi-employer plan withdrawals on or after case start, claims could equal benefits that accrued between case start and the withdrawal date. The bill would also put some labor-law damages (including WARN) ahead of wages and benefits for priority calculations.
Court rules to protect jobs
If enacted, chapter 11 plans for companies (not individuals) would need to show they preserve going-concern value and jobs. Courts would favor plans that better keep businesses operating and saving jobs. In asset sales, courts would give strong weight to buyers who will keep jobs and match pension and health benefits for retirees. Plans that sell most assets would have to require buyers to carry out those protections.
Limit executive pay and clawbacks
If enacted, special payments to insiders and certain executives would face tighter court approval and reasonableness tests. The law would expand who counts as a covered insider and bar some insider payments if the company cut nonmanagement severance in the prior year. Trustees could avoid and recover transfers to insiders made in the year before filing, and common defenses to recovery would be barred.
Stronger rules for unions and retirees
If enacted, unions and retiree reps would get more notice and a 21-day wait before hearings on rejecting a union deal or changing retiree benefits. Trustees would have to give retiree reps an initial proposal, a business plan basis, and needed negotiation information. The bill would let labor organizations file as creditors and seek reasonable fees and costs after a hearing. Courts could also calculate percent losses to retiree or union benefits and let the estate seek the same percent of recent officer pay.
Sponsors & CoSponsors
Sponsor
Richard Durbin
IL • D
Cosponsors
Josh Hawley
MO • R
Sponsored 4/9/2025
Brian Schatz
HI • D
Sponsored 4/9/2025
Tammy Duckworth
IL • D
Sponsored 4/9/2025
Amy Klobuchar
MN • D
Sponsored 4/9/2025
Sheldon Whitehouse
RI • D
Sponsored 4/9/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.govTake It Personal
Get Your Personalized Policy View
Start a Free Government Policy Watch to see how policy affects your household, then upgrade to PRIA Full Coverage for year-round monitoring.
Already have an account? Sign in