# 119-s-1381: Protecting Employees and Retirees in Business Bankruptcies Act of 2025

119-s-1381, Protecting Employees and Retirees in Business Bankruptcies Act of 2025, is a 119th Congress bill sponsored by Sen. Durbin, Richard J. [D-IL] (D-IL); status introduced; PRIA reads it as touching household money (as of 2026-08-11).

- Canonical: https://policyrisk.com/legislation/119-s-1381
- As of: 2026-08-11
- Plain-text twin of the page above; the HTML and this file carry the same facts.

## Facts
- Bill: 119-s-1381
- Congress: 119
- Title: Protecting Employees and Retirees in Business Bankruptcies Act of 2025
- Status: introduced
- Introduced: 2025-04-09
- Sponsor: Sen. Durbin, Richard J. [D-IL] (D-IL)
- Cosponsors: 6
- Policy area: Finance and Financial Sector
- Touches household money: yes
- Last recorded action: 2026-08-11

## 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. - 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.

## Cosponsors (6)

- Sen. Hawley, Josh [R-MO] (R-MO), 2025-04-09T00:00:00.000Z
- Sen. Schatz, Brian [D-HI] (D-HI), 2025-04-09T00:00:00.000Z
- Sen. Duckworth, Tammy [D-IL] (D-IL), 2025-04-09T00:00:00.000Z
- Sen. Klobuchar, Amy [D-MN] (D-MN), 2025-04-09T00:00:00.000Z
- Sen. Whitehouse, Sheldon [D-RI] (D-RI), 2025-04-09T00:00:00.000Z
- Sen. Cortez Masto, Catherine [D-NV] (D-NV), 2026-05-13T00:00:00.000Z

## Provisions PRIA read

- Higher pay and severance priority: benefit, high. 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 pla…
- Stronger bankruptcy claims for retirees: benefit, high. 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 contribut…
- Court rules to protect jobs: benefit, high. 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…
- Limit executive pay and clawbacks: benefit, medium. 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 recov…
- Stronger rules for unions and retirees: benefit, medium. 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 organ…

## Related bills

- 119-s-5066: Health Equity and Accountability Act of 2026
- 119-s-1748: Kids Online Safety Act
- 119-s-51: Washington, D.C. Admission Act
- 119-s-3071: Keep SNAP and WIC Funded Act of 2025
- 119-s-1032: Major Richard Star Act
- 119-s-5108: Right to IVF Act of 2026

## Sources
- [119-s-1381 on Congress.gov](https://www.congress.gov/bill/119th-congress/senate-bill/1381)

## Related
- [119-s-5066: Health Equity and Accountability Act of 2026](https://policyrisk.com/legislation/119-s-5066)
- [119-s-1748: Kids Online Safety Act](https://policyrisk.com/legislation/119-s-1748)
- [119-s-51: Washington, D.C. Admission Act](https://policyrisk.com/legislation/119-s-51)
- [119-s-3071: Keep SNAP and WIC Funded Act of 2025](https://policyrisk.com/legislation/119-s-3071)
- [119-s-1032: Major Richard Star Act](https://policyrisk.com/legislation/119-s-1032)
- [119-s-5108: Right to IVF Act of 2026](https://policyrisk.com/legislation/119-s-5108)
- [All bills in Congress](https://policyrisk.com/legislation)

Source: PRIA, https://policyrisk.com/legislation/119-s-1381 (as of 2026-08-11).