Help Center

Employee Payment Obligations a Priority Expense for Chapter 11 Debtors Prior to Rejection of Collective Bargaining Agreement According to Latest ABI Poll

Contact: John Hartgen
             (703) 739-0800
             jhartgen@abiworld.org

 

EMPLOYEE PAYMENT OBLIGATIONS A PRIORITY EXPENSE FOR CHAPTER 11 DEBTORS PRIOR TO REJECTION OF COLLECTIVE BARGAINING AGREEMENT, ACCORDING TO LATEST ABI POLL

February 12, 2007, Alexandria, Va. — An overwhelming majority (73 percent) of respondents in a recent American Bankruptcy Institute online poll said that employee payment obligations due between a chapter 11 filing and rejection of a collective bargaining agreement should be payable as a priority administrative expense. Fifty-six percent of respondents “agreed strongly” and another 17 percent “somewhat agreed” that payments to employees between the chapter 11 filing and termination of the collective bargaining agreement are payable as a priority administrative expense.

Nineteen percent disagreed that employee payments should be considered a priority administrative expense for chapter 11 debtors between the filing and termination of the collective bargaining agreement. Twelve percent “disagreed strongly” and another seven percent “somewhat disagreed” that the employee payments between filing and the termination of the collective bargaining agreement should be considered a priority administrative expense for chapter 11 debtors.

The Poll question is based roughly on the Peters v. Pikes Peak case in which the Colorado Springs Symphony Orchestra failed to pay its musicians between filing for chapter 11 and obtaining court approval to reject the collective bargaining agreement with the musicians. The Tenth Circuit Court of Appeals sided with the musicians as they sought an administrative priority for the wages payable under the collective bargaining agreement during the five-week post-petition, pre-rejection period.

ABI members and members of the public were welcome to submit their response to the statement: “The debtor’s obligation under a collective bargaining agreement for payments to employees due between the chapter 11 petition and the date the debtor rejects the agreement are payable as a priority administrative expense.(Peters v. Pikes Peak).  The latest ABI Quick Poll was open for voting from Feb. 1 - 8.

ABI’s weekly Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.

###

ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.