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Federal Bankruptcy Code modified.

Organized labor, which had been disappointed by the Supreme Court's ruling liberalizing the right of employers entering bankruptcy to abrogate union contracts, got some relief from recent legislation which modified the Federal Bankruptcy Code. Under the new approach, a firm or bankruptcy trustee must attempt "to reach mutually satisfactory [contract] modifications" before coming to the court. If the bargainers are unable to agree on modifications, the judge may put the employer's proposal into effect only if the union has rejected it "without good cause" and "the balance of the equities [among the union, management, and other vested parties] clearly favors" the proposal.

Earlier, the Supreme Court held that an employer filing for reorganization under the Bankruptcy Code could temporarily void or alter a contract even before the case was heard by a bankruptcy judge and that the judge could make the action permanent if the employer proved that the contract "burdent" chances of recovery. (See Monthly Labor Review, April 1984, p. 48.)

AFL-CIO President Lane Kirkland said the legislated changes in the Bankruptcy Code "takes collective bargaining out of the courts and returns it to the negotiating table where these issues should be handled . . ." and "clses the door on the use of bankruptcy laws unscrupulous employers."

Two of the cases leading to the changes in the Bankruptcy Code involved Continental Airlines and Wilson Foods Corp. (See Monthly Labor Review November 1983, P. 73, and September 1983, p. 40.)
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Publication:Monthly Labor Review
Date:Sep 1, 1984
Previous Article:Airline update.
Next Article:AT & T freezes pay of nonunion workers.

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