Protecting Employees and Retirees in Business Bankruptcies Act of 2025
Protecting Employees and Retirees in Business Bankruptcies Act of 2025
Plain Language Summary
# Protecting Employees and Retirees in Business Bankruptcies Act of 2025 ## What the Bill Does This bill would strengthen protections for workers and retirees when a company files for Chapter 11 bankruptcy (a type of reorganization where a business continues operating while restructuring debts). Specifically, it would double the amount employees can claim for unpaid wages and benefits from $10,000 to $20,000, and remove the current requirement that wages must have been earned within the previous 180 days to qualify for protection. The bill also prioritizes certain employee claims—such as severance pay, pension contributions, and damages from labor law violations—so these get paid before other debts in the bankruptcy process. ## Key Protections and Limits A major provision limits how much executives can be compensated during bankruptcy reorganization, preventing company insiders and senior leaders from receiving excessive pay while employees lose wages or benefits.
The bill essentially ensures that workers' financial interests are better protected alongside creditors in a bankruptcy settlement, reducing the risk that employees will lose earned wages or retirement benefits while the company restructures. ## Current Status The bill was introduced by Senator Richard Durbin (D-IL) and is currently in committee review. It has not yet been voted on by either chamber of Congress.
CRS Official Summary
Protecting Employees and Retirees in Business Bankruptcies Act of 2025This bill establishes limits on executive compensation and provides protections for employee wages and benefits if an employer files for Chapter 11 (reorganization) bankruptcy.First, the bill increases the limit on claims for wages, salaries, other employee benefits, and commissions from $10,000 to $20,000 and eliminates the requirement that such claims must have been earned within 180 days before the filing of the bankruptcy petition.The bill grants certain claims higher priority in the bankruptcy process, including specific types of severance pay; contributions to an employee benefit plan; back pay, civil penalties, or damages arising from certain labor law violations; and certain pension plan withdrawal liabilities.The bill also limits executive compensation under a reorganization plan. For example, insiders (parties with close relationships to the debtor), senior executives, and others as specified by the bill may only receive payments or other distributions that are generally applicable to all full-time employees, subject to certain limits. The bill further restricts the compensation of any insider who continues to be employed by the debtor.A reorganization plan may only be approved if it provides for the recovery of claims relating to retiree benefits or for other financial returns paid under the plan.The bill also provides protections for collective bargaining agreements (CBAs) during bankruptcy proceedings. If a proceeding resulting from a CBA was or could have been commenced before the bankruptcy, the bankruptcy does not act as a stay in such a proceeding.
Latest Action
Read twice and referred to the Committee on the Judiciary. (text: CR S2523-2527)