SLAP Act

II 116TH CONGRESS 1ST SESSION S. 2737 To provide protections for pensions in bankruptcy proceedings, and for other purposes. IN THE SENATE OF THE UNITED STATES OCTOBER 30, 2019 Mr. MANCHIN introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To provide protections for pensions in bankruptcy proceedings, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop Looting American 4 Pensions Act of 2019’’ or the ‘‘SLAP Act’’. 5 SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT IN- 6 COME SECURITY ACT OF 1974 AND THE IN- 7 TERNAL REVENUE CODE OF 1986. 8 (a) MINIMUM FUNDING STANDARD.— 9 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2737 IS (1) AMENDMENT TO THE EMPLOYEE RETIRE- 1 MENT INCOME SECURITY ACT OF 1974.—Section 2 302(a) of the Employee Retirement Income Security 3 Act of 1974 (29 U.S.C. 1082(a)) is amended by 4 adding at the end the following: 5 ‘‘(3) CASES UNDER TITLE 11.—A plan shall 6 continue to be required to satisfy the minimum 7 funding standard under paragraph (1) if a case 8 under title 11, United States Code, is commenced 9 with respect to the employer unless the Secretary of 10 the Treasury has waived the requirements of this 11 subsection with respect to the plan under subsection 12 (c).’’. 13 (2) AMENDMENT TO THE INTERNAL REVENUE 14 CODE OF 1986.—Section 412(a) of the Internal Rev- 15 enue Code of 1986 is amended by adding at the end 16 the following: 17 ‘‘(3) CASES UNDER TITLE 11.—A plan shall 18 continue to be required to satisfy the minimum 19 funding standard under paragraph (1) if a case 20 under title 11, United States Code, is commenced 21 with respect to the employer unless the Secretary 22 has waived the requirements of this subsection with 23 respect to the plan under subsection (c).’’. 24 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2737 IS (b) OBLIGATION TO CONTRIBUTE.—Section 4212 of 1 the Employee Retirement Income Security Act of 1974 2 (29 U.S.C. 1392) is amended by adding at the end the 3 following: 4 ‘‘(d) A person shall be subject to an obligation to con- 5 tribute under this part notwithstanding the commence- 6 ment of a case under title 11, United States Code, with 7 respect to that person.’’. 8 (c) OBLIGATION TO PAY WITHDRAWAL LIABILITY.— 9 Section 4220(c) of the Employee Retirement Income Secu- 10 rity Act of 1974 (29 U.S.C. 1399(c)) is amended by add- 11 ing at the end the following: 12 ‘‘(9) An employer shall be subject to an obliga- 13 tion to make payments of withdrawal liability under 14 this section notwithstanding the commencement of a 15 case under title 11, United States Code, with respect 16 to the employer.’’. 17 SEC. 3. ADMINISTRATIVE EXPENSES AND PRIORITIES IN 18 BANKRUPTCY PROCEEDINGS. 19 (a) ALLOWANCE OF ADMINISTRATIVE EXPENSES.— 20 (1) IN GENERAL.—Section 503(b) of title 11, 21 United States Code, is amended— 22 (A) in paragraph (8)(B), by striking 23 ‘‘and’’; 24 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2737 IS (B) in paragraph (9), by striking the pe- 1 riod at the end and inserting a semicolon; and 2 (C) by adding at the end the following: 3 ‘‘(10) unpaid minimum required contributions, 4 as defined in section 302(c)(4)(C)(iii)(I) of the Em- 5 ployee Retirement Income Security Act of 1974 (29 6 U.S.C. 1082(c)(4)(C)(iii)(I)) and section 4971(c)(4) 7 of the Internal Revenue Code of 1986; and 8 ‘‘(11) withdrawal liability determined under 9 part 1 of subtitle E of title IV of the Employee Re- 10 tirement Income Security Act of 1974 (29 U.S.C. 11 1381 et seq.), including any accelerated payment of 12 such withdrawal liability under section 4219(c)(5) of 13 the Employee Retirement Income Security Act of 14 1974 (29 U.S.C. 1399(c)(5)).’’. 15 (2) CONFORMING AMENDMENT RELATING TO 16 PRIORITIES.—Section 507(a)(5) of title 11, United 17 States Code, is amended, in the matter preceding 18 subparagraph (A), by inserting after ‘‘contributions 19 to an employee benefit plan’’ the following: ‘‘, other 20 than for unpaid minimum required contributions, as 21 defined in section 302(c)(4)(C)(iii)(I) of the Em- 22 ployee Retirement Income Security Act of 1974 (29 23 U.S.C. 1082(c)(4)(C)(iii)(I)) and section 4971(c)(4) 24 of the Internal Revenue Code of 1986’’. 25 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2737 IS (b) INCREASED WAGE PRIORITY.—Section 507(a) of 1 title 11, United States Code, is amended— 2 (1) in paragraph (4)— 3 (A) by striking ‘‘$10,000’’ and inserting 4 ‘‘$20,000’’; 5 (B) by striking ‘‘within 180 days’’; and 6 (C) by striking ‘‘or the date of the ces- 7 sation of the debtor’s business, whichever oc- 8 curs first,’’; and 9 (2) in paragraph (5)— 10 (A) in subparagraph (A)— 11 (i) by striking ‘‘within 180 days’’; and 12 (ii) by striking ‘‘or the date of the 13 cessation of the debtor’s business, which- 14 ever occurs first’’; and 15 (B) by striking subparagraph (B) and in- 16 serting the following: 17 ‘‘(B) for each such plan, to the extent of 18 the number of employees covered by each such 19 plan, multiplied by $20,000.’’. 20 SEC. 4. AUTOMATIC STAY IN BANKRUPTCY PROCEEDINGS. 21 Section 362(b) of title 11, United States Code, is 22 amended— 23 (1) in paragraph (27), by striking ‘‘and’’ at the 24 end; 25 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2737 IS (2) in paragraph (28), by striking the period at 1 the end and inserting ‘‘; and’’; and 2 (3) by adding at the end the following: 3 ‘‘(29) under subsection (a) of this section, the 4 commencement or continuation of an action or pro- 5 ceeding by the Director of the Pension Benefits 6 Guaranty Corporation to enforce the minimum 7 standard under section 303(k) of the Employment 8 Retirement Income Security Act of 1974 (29 U.S.C. 9 1083(k)).’’. 10 SEC. 5. SALES OF PROPERTY IN BANKRUPTCY PRO- 11 CEEDINGS. 12 (a) IN GENERAL.—Section 363 of title 11, United 13 States Code, is amended— 14 (1) in subsection (b)(1), in the matter pre- 15 ceding subparagraph (A), by striking ‘‘The trustee’’ 16 and inserting ‘‘Subject to subsection (q), the trust- 17 ee’’; 18 (2) in subsection (c)(1), by striking ‘‘If the 19 business’’ and inserting ‘‘Subject to subsection (q), 20 if the business’’; and 21 (3) by adding at the end the following: 22 ‘‘(q)(1) Subject to paragraphs (2) and (3), the trust- 23 ee may not sell property of the estate under subsection 24 (b) or (c) unless the trustee is able to demonstrate that— 25 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2737 IS ‘‘(A) the sale complies with the provisions of 1 this title; 2 ‘‘(B) the sale has been proposed in good faith 3 and not by any means forbidden by the law; 4 ‘‘(C) any payment made for services or for costs 5 and expenses in or in connection with the sale is rea- 6 sonable; 7 ‘‘(D) if, with respect to the case, there is any 8 fee payable under section 1930 of title 28, the pro- 9 ceeds of the sale will be used to pay that fee; and 10 ‘‘(E) with respect to each class of claims or in- 11 terests— 12 ‘‘(i) such class has accepted the sale; or 13 ‘‘(ii) such class is not impaired by the sale. 14 ‘‘(2) The trustee, on request of the proponent of the 15 sale, may sell property of the estate under subsection (b) 16 or (c) if— 17 ‘‘(A) all of the applicable requirements of para- 18 graph (1) other than subparagraph (E) are met with 19 respect to a sale of property; and 20 ‘‘(B) the sale does not discriminate unfairly, 21 and is fair and equitable, with respect to each class 22 of claims or interests that is impaired under, and 23 has not accepted, the sale. 24 VerDate Sep 11 2014 20:57 Nov 04, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2737 IS ‘‘(3) The trustee may not sell substantially all of the 1 property of the estate under subsection (b) or (c) during 2 the 60-day period beginning on the date of the filing of 3 the petition unless the court determines that— 4 ‘‘(A) there is a high likelihood that the value of 5 the property of the estate will decrease significantly 6 during that period; and 7 ‘‘(B) the requirements under paragraph (1) 8 have been satisfied with respect to each sale that 9 would contribute to substantially all of the property 10 of the estate being sold.’’. 11 (b) PROTECTION OF EMPLOYEE BENEFITS IN A 12 SALE OF ASSETS.—Section 363(b) of title 11, United 13 States Code, is amended by adding at the end the fol- 14 lowing: 15 ‘‘(3)(A) In approving a sale under this subsection, the 16 court shall consider the extent to which a bidder has of- 17 fered to maintain existing jobs, preserve terms and condi- 18 tions of employment, and assume or match pension and 19 retiree health benefit obligations in determining whether 20 an offer constitutes the highest or best offer for such prop- 21 erty.’’. 22 SEC. 6. FRAUDULENT TRANSFERS AND OBLIGATIONS. 23 Section 548 of title 11, United States Code, is 24 amended— 25 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2737 IS (1) in subsection (a)(1), in the matter pre- 1 ceding subparagraph (A), by striking ‘‘2 years’’ and 2 inserting ‘‘6 years’’; and 3 (2) in subsection (b), by striking ‘‘2 years’’ and 4 inserting ‘‘6 years’’. 5 SEC. 7. LIMITATIONS ON EXECUTIVE COMPENSATION EN- 6 HANCEMENTS. 7 Section 503(c) of title 11, United States Code, is 8 amended— 9 (1) in paragraph (1), in the matter preceding 10 subparagraph (A)— 11 (A) by inserting ‘‘, a senior executive offi- 12 cer, or any of the twenty next most highly com- 13 pensated employees or consultants’’ after ‘‘an 14 insider’’; 15 (B) by inserting ‘‘or for the payment of 16 performance or incentive compensation, or a 17 bonus of any kind, or other financial returns 18 designed to replace or enhance incentive, stock, 19 or other compensation in effect before the date 20 of the commencement of the case,’’ after ‘‘re- 21 main with the debtor’s business,’’; and 22 (C) by inserting ‘‘clear and convincing’’ be- 23 fore ‘‘evidence in the record’’; and 24 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 2737 IS (2) by amending paragraph (3) to read as fol- 1 lows: 2 ‘‘(3) other transfers or obligations, to or for the 3 benefit of insiders, senior executive officers, man- 4 agers, or consultants providing services to the debt- 5 or, in the absence of a finding by the court, based 6 upon clear and convincing evidence, and without def- 7 erence to the debtor’s request for such payments, 8 that such transfers or obligations are essential to the 9 survival of the debtor’s business or (in the case of 10 a liquidation of some or all of the debtor’s assets) 11 essential to the orderly liquidation and maximization 12 of value of the assets of the debtor, in either case, 13 because of the essential nature of the services pro- 14 vided, and then only to the extent that the court 15 finds such transfers or obligations are reasonable 16 compared to individuals holding comparable posi- 17 tions at comparable companies in the same industry 18 and not disproportionate in light of economic conces- 19 sions by the debtor’s nonmanagement workforce dur- 20 ing the case.’’. 21 VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 2737 IS SEC. 8. APPLICABILITY. 1 This Act and the amendments made by this Act shall 2 apply with respect to any case that is commenced on or 3 after the date of enactment of this Act. 4 Æ VerDate Sep 11 2014 15:50 Nov 02, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S2737.IS S2737 pamtmann on DSKBC07HB2PROD with BILLS