Bankruptcy law rewritten to protect workers, restrict executive bonuses
S. 1381 — Protecting Employees and Retirees in Business Bankruptcies Act of 2025 · Filed by Richard Durbin (D-IL) · 6 cosponsors · Introduced Apr 9, 2025 · Referred to committee
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What it does
This bill strengthens protections for employees and retirees in business bankruptcies by raising wage priority thresholds from $10,000 to $20,000, allowing workers to claim losses from company stock held in retirement plans, restricting executive compensation and bonuses during reorganization, and requiring courts to prioritize job preservation and benefit continuation when approving asset sales or reorganization plans. It also tightens the rules for rejecting collective bargaining agreements and retiree health benefits, requiring companies to prove financial necessity and limiting cuts to the minimum needed for reorganization.
Why we flagged it
The bill's operative mechanism is a comprehensive rebalancing of bankruptcy law to prioritize employee and retiree claims, restrict executive compensation, and require job preservation in asset sales. This is its true functional nature—a pro-worker reform of insolvency law.
What the text implies
- Executive compensation clawback (Section 305) may deter qualified executives from serving distressed companies, potentially affecting reorganization outcomes and management continuity during critical periods.
- Requirement that courts weigh job preservation in asset sales (Section 203) may reduce purchase prices or deter bidders, potentially lowering estate value available to all creditors, including workers.
- Expanded wage priority and severance claims may crowd out unsecured creditors (suppliers, vendors, smaller lenders), shifting losses to non-employee stakeholders.
- Stricter collective bargaining rejection standards (Section 201) may make reorganization more difficult or impossible in some cases, potentially leading to liquidation rather than going-concern sales.
- Recovery of executive compensation tied to pension plan terminations (Section 305) creates retroactive liability for officers, potentially exposing them to personal liability and litigation risk.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Ordinary workers and retirees gain concrete protections: higher wage priority, ability to claim retirement account losses, stronger procedural rights in collective bargaining disputes, and court-mandated consideration of job preservation. Executives and highly compensated insiders face meaningful restrictions on bonuses, incentive pay, and deferred compensation, with potential clawback of compensation when employee benefits are cut. The bill rebalances bankruptcy law toward workers at the expens
Who stands to gain
- employees and wage earners (higher priority claims, expanded recovery rights)
- retirees and pension plan participants (protected benefits, claim rights for losses)
- labor organizations (procedural rights, fee recovery, grievance protections)
Named in the bill
U.S. Bankruptcy Code (Title 11), Employee Retirement Income Security Act (ERISA), Pension Benefit Guaranty Corporation (PBGC), Worker Adjustment and Retraining Notification Act (WARN Act), Railway Labor Act, Internal Revenue Code Section 409A, Collective bargaining agreements, Defined benefit pension plans, Defined contribution plans, Multi-employer pension plans
Where it stands
6 cosponsors: 5 Democrats, 1 Republicans.
- Apr 9, 2025 — Introduced · Congress.gov: “Introduced in Senate”
- Apr 9, 2025 — Referred to Senate Committee on the Judiciary · Congress.gov: “Read twice and referred to the Committee on the Judiciary. (text: CR S2523-2527)”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
2 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $441,000 in lobbying spend. A filing names 35 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 41% of bills with at least one filing.
Richard Durbin, the sponsor, reported $-29,800 in PAC receipts in the 2026 cycle.
- Air Line Pilots Association — $266,000 on 1 filing
- Alliance for Retired Americans — $175,000 on 2 filings
Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (42,958 characters) on Oct 21, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,388 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Dec 2025 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 20, 2026 · page rendered 2026-10-21.
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