A Bankrupt Bargain

Abstract

This Note discusses the conflict between labor law and the Bankruptcy Code, specifically focusing on whether bankrupt debtor firms can reject expired labor contracts within bankruptcy. The National Labor Relations Act prohibits employers from unilaterally changing key terms of an expired collective bargaining agreement after the agreement has expired. This rule serves to promote labor peace and prevent coercive actions by employers during the post-expiration negotiation period. Increasingly, Bankruptcy courts interpret the statutory provision that governs the rejection of labor contracts, § 1113 of the Bankruptcy Code, to allow for rejection of expired agreements. This trend poses a threat to labor unions’ bargaining power and conflicts with the National Labor Relations Act’s statutory goals. This Note argues that a textualist interpretation of § 1113 illuminates legislative intent to prohibit debtors’ rejection of expired collective bargaining agreements in bankruptcy. It argues that § 1113 allows for temporary changes to the terms of an expired agreement, simultaneously providing for relief for the debtor while preserving the intended negotiation process between unions and employers.