Washington, D.C. 7/27/2012 09:03 PM GMT (TransWorldNews)
When a business files for Chapter 11 bankruptcy their creditors line up to get and often at the back of that line are the employees and retirees. While the bankrupt company asks for permission to give their executives million dollar bonuses, such as the recent request from Hawker Beechcraft, retirees and employees can only get 30 cents to 40 cents per dollar of their pension plans they worked hard to build up.
Senator Al Franken (D- MN) has introduced a bill, the Protecting Employees and Retirees in Business Bankruptcies Act, which would give retirees more protections when the companies they work for declare Chapter 11 bankruptcy.
“When a company declares bankruptcy, it’s just plain wrong that employees are left to fight for what they are duly owed while executives walk off with huge bonuses,” Senator Franken says.
The bill would improve an employee’s ability to recover benefits by doubling the maximum wage claim to $20,000 and allows an additional $20,000 claim for contributions to benefit plans. Situations in which collective bargaining agreements can be restricted of amended would be restricted. Executive compensation programs would be restricted by requiring more disclosure and court approval of the bonuses. These are just some highlights; learn more about the bill here: http://www.govtrack.us/congress/bills/112/hr6117/text.
Under Chapter 11, a bankruptcy attorney develops a plan that satisfies creditors while the company is allowed to hold onto some capital so that they can turn their business around. This is a great opportunity to save a business but the employees who helped build the business should be given the same consideration as executives and other creditors.