In a question of first impression, a federal appeals court on Jan. 15 ruled that Chapter 11 debtor Trump Entertainment Resorts may break its collective bargaining agreement with union workers, saying the employer’s obligations to abide by the terms of the expired agreement would undermine its ability to reorganize and stay in business.
The opinion addressed two “potentially conflicting” provisions of federal law—Section 1113 of the Bankruptcy Code, which allows a debtor to reject its collective bargaining agreements, or CBAs, under certain conditions, and the National Labor Relations Act, which prevents employers from unilaterally altering the terms of CBAs, even after they expire.
