11 U.S.C Section 1114 creates a procedure for modification or rejection of retiree benefit obligations. Explain this statement by stating the provisions covered under Section 1114

Answer 1

Congress amended the Bankruptcy Code to include Section 1114, which creates a procedure for modification or rejection of retiree benefit obligations. Section 1114 requires that the bankrupt employer make a proposal for modification to the representative of the retirees. The employer must also provide the retirees' representative with the information upon which the proposal is based and demonstrate the necessity of the modification for the reorganization of the employer. The employer must negotiate in good faith with the representative over the proposed modification. If the representative does not agree to the modification, the employer can ask the bankruptcy court to order the modification. Before the court can order the modification, the employer must convince the court that the modification is necessary to permit the reorganization of the employer, that the proposed modification treats all affected parties fairly and equitably, and that the retirees' representative refused to accept the proposal without good cause.