Bankruptcy Law and Labor Law - Resolving the Conflict between the Bankruptcy and Labor Laws in Rejecting Collective Bargaining Agreements

Abstract

INTRODUCTION|High priced union labor could force an otherwise financially sound company into fiscal trouble. Recently, companies such as Wilson Foods Corporation and Continental Airlines have been faced with just such a situation. Their recourse has been to seek shelter under the Bankruptcy Code by filing for reorganization and then rejecting or renegotiating their previously negotiated union contracts.|Under the Bankruptcy Reform Act of 1978, a company does not have to demonstrate insolvency before it can fie for Chapter 11 reorganization. Once the company is in reorganization, it can reject any executory contract, including union contracts, as long as it has the approval of the bankruptcy court. Contrary to this, the National Labor Relations Act 8 (NLRA) dictates that the only way a company can alter its collective bargaining agreement is through the procedures outlined under section 8(d) of the NLRA. Under this section, the company must first obtain the consent of the union before rejecting the agreement...