Marshall S. Huebner, who co-heads Davis Polk's Insolvency and Restructuring Group and served as lead counsel in several airline restructurings, testified by invitation before Congress on how to restructure the Bankruptcy Code to strike a better balance between debtors' needs for reorganization tools and the needs of and issues facing employees of companies in Chapter 11. Specifically, Mr. Huebner recommended four changes to Section 1113 of the Bankruptcy Code:
- Considering executive compensation both during the Chapter 11 proceedings and one year prior thereto
- Limiting debtors’ 1113 proposals to four years following emergence from bankruptcy
- Allowing damage claims for union members in respect of 1113 contract rejections, which claims will often translate into equity in the reorganized company
- Ensuring that before deciding on a motion to reject a contract, a court consider both sides’ final proposals in addition to their initial proposals
The hearing was held before the House Judiciary Subcommittee on Commercial and Administrative Law.
Click here to read a transcript of Huebner's testimony.
Click here to read the article from BNA's Daily Labor Report.