The Prioritizing Our Workers Act of 2019, companion bills introduced in the U.S. House of Representatives and the Senate by Rep. Tim Ryan (D-OH) and Sen. Joe Manchin (D-WV), would provide greater protection of workers’ defined benefit pension plan benefits when a sponsoring employer files for Chapter 11 bankruptcy protection.
Under a Chapter 11 proceeding, an enterprise is given temporary protection from creditors, and an agreement for eventual repayment of some or all financial obligations is typically negotiated. In general, wages owed to employees after the bankruptcy filing are given priority over unsecured claims of creditors, but promised pension benefits—which are commonly accrued before the bankruptcy event—are less protected. As a result, workers may find their pension benefits reduced or unavailable.
The Prioritizing Our Workers Act of 2019 would generally place pension obligations on a footing similar to wages owed to workers, thereby increasing the likelihood that these obligations would be met; but as a consequence might have the opposite effect for some creditors.
Rep. Ryan’s bill (H.R. 2619) has been referred to the House Committee on the Judiciary, while Sen. Manchin’s bill is currently unnumbered.