The United States Bankruptcy Code (the “Bankruptcy Code”) allows a trustee a debtor-in-possession (“DIP”) to assume or reject a collective bargaining agreement (“CBA”). Courts are split on whether a trustee or DIP may reject an expired collective bargaining agreement under section 1113 of the Bankruptcy Code. In general, a collective bargaining agreement may be rejected notwithstanding the labor standards afforded to employees by the National Labor Relations Act (“NLRA”). In particular, under the NLRA, an employer that is party to a CBA is obligated to bargain with its employees until the employer either enters into a new contract or bargains to impasse– even after the CBA has expired. Consequently, a debtor may reject an expired CBA to avoid its ongoing bargaining obligations under the NLRA.
Section 1113 also fails to restrict its prescription to “executory” or “unexpired” collective bargaining agreements. Some courts have held that a debtor may reject an expired CBA in bankruptcy. Other courts have disagreed and concluded that a bankruptcy court does not have the jurisdiction over an expired CBA has expired. Last year, the Supreme Court denied a petition for writ of certiorari to the Third Circuit in In re Trump Entertainment Resorts, where the court held that a debtor may reject an expired collective bargaining agreement. Consequently, courts remain divided on a debtor’s ability to reject an expired CBA.