Title 11 — BankruptcyRelease 119-73
§1114 Payment of insurance benefits to retired employees
Title 11 › Chapter CHAPTER 11— - REORGANIZATION › Subchapter SUBCHAPTER I— - OFFICERS AND ADMINISTRATION › § 1114
Summary
Requires the debtor (or the trustee who runs the case) to keep paying retiree benefits that the employer set up before filing for bankruptcy. "Retiree benefits" means payments for retired workers and their spouses or dependents for health care, disability, death, and similar coverage under plans or insurance the employer provided. A labor union that signed a workers’ bargaining agreement is usually the official representative for retirees covered by that agreement, unless the union says no or a court picks someone else. If retirees are not in a union, or if the court thinks different representation is needed, the court can appoint a committee of retired employees to speak for them. Committees have the same powers as other official committees in bankruptcy. The trustee must make a written proposal to the retirees’ representative, give needed information, and meet in good faith to try to reach an agreement before asking the court to change benefits. The court can only order changes if the trustee made a proper proposal, the representative refused it without good reason, and the change is needed to let the company reorganize and is fair to everyone. The court can allow temporary changes first if needed to keep the business alive. A hearing on a modification must be set within 14 days with at least 10 days’ notice, and the court should rule within 90 days, after which the trustee may act if no ruling is made. Retiree claims get special protection in bankruptcy and high-income retirees (gross income of $250,000 or more in the prior 12 months) are generally excluded unless the court finds they cannot get similar coverage elsewhere.
Full Legal Text
Title 11, §1114
Bankruptcy — Source: USLM XML via OLRC
(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 section 1102 and 1103 of this title for the purpose of carrying out the purposes of section 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 order the appointment of 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. The United States trustee shall appoint any such committee.
(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,
(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;
(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)If the debtor, during the 180-day period ending on the date of the filing of the petition—
(1)modified retiree benefits; and
(2)was insolvent on the date such benefits were modified;
(m)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.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2005—Subsec. (d). Pub. L. 109–8, § 447, substituted “order the appointment of” for “appoint” and inserted “The United States trustee shall appoint any such committee.” at end. Subsecs. (l), (m). Pub. L. 109–8, § 1403, added subsec. (l) and redesignated former subsec. (l) as (m).
Statutory Notes and Related Subsidiaries
Effective Date
of 2005 AmendmentAmendment by section 1403 of Pub. L. 109–8 effective Apr. 20, 2005, and applicable only with respect to cases commenced under this title on or after Apr. 20, 2005, see section 1406 of Pub. L. 109–8, set out as a note under section 507 of this title. Amendment by section 447 of Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such
Effective Date
, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title.
Effective Date
Pub. L. 100–334, § 4, June 16, 1988, 102 Stat. 615, provided that: “(a) General
Effective Date
.—Except as provided in subsection (b), this Act and the
Amendments
made by this Act [enacting this section, amending section 1129 of this title, enacting provisions set out as a note under section 101 of this title, and amending and repealing provisions set out as notes under section 1106 of this title] shall take effect on the date of the enactment of this Act [June 16, 1988]. “(b) Application of
Amendments
.—The
Amendments
made by section 2 [enacting this section and amending section 1129 of this title] shall not apply with respect to cases commenced under title 11 of the United States Code before the date of the enactment of this Act [
June 16, 1988].” Payment of Certain Benefits to Retired Former EmployeesFor payment of benefits by bankruptcy trustee to retired employees in enumerated circumstances with respect to cases commenced under this chapter in which a plan for reorganization had not been confirmed by the court and in which any such benefit was still being paid on
October 2, 1986, and in cases that became subject to this chapter after
October 2, 1986, and before
June 16, 1988, see section 101(b) [title VI, § 608] of Pub. L. 99–500, and Pub. L. 99–591, as amended, set out as a note under section 1106 of this title.
Reference
Citations & Metadata
Citation
11 U.S.C. § 1114
Title 11 — Bankruptcy
Last Updated
Apr 6, 2026
Release point: 119-73