March 03, 2016

Third Circuit Permits Debtors to Trump Rights Under Expired CBA

Philadelphia and Wilmington partner Andy Kassner and associate Joe Argentina published an article in The Legal Intelligencer titled, “Third Circuit Permits Debtors to Trump Rights Under Expired CBA.” The article discussed the recent decision by the United States Third Circuit Court of Appeals on whether a debtor can reject the continuing terms of a collective bargaining agreement (CBA) under Section 1113 of the United States Bankruptcy Code after the CBA has expired. 

The Trump Taj Mahal Casino sought to reject its CBA with the majority of its workforce.  The CBA expired a few days after the bankruptcy petition was filed.  The Union argued, among other things, that a debtor cannot reject an expired contract.  The Bankruptcy Court overruled the Union’s objection, and the decision was appealed directly to the Third Circuit.  The court noted that Section 1113 is not limited to unexpired CBAs and that the rejection of the CBA was essential for the Debtors’ survival. Further, the Court noted that the Union attempted to harm the Debtors’ business rather than engage in negotiations. The Court concluded by affirming the Bankruptcy Court’s decision to permit the Debtors to reject the expired CBA.

Read: Third Circuit Permits Debtors to Trump Rights Under Expired CBA.

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