Impact of a Bankruptcy Filing on CWA's Contract at Adelphia
Adelphia Filing for Chapter 11 Reorganization Seen as Imminent
During the week of June 17-21, it is thought that Adelphia Communications will file for reorganization under Chapter 11 of the U.S. bankruptcy laws.
Adelphia's filing of a Chapter 11 proceeding does not automatically cause any changes to the wages, grievance and arbitration machinery, or other terms of employment of workers at the company who are covered by CWA contracts. Here are some important things to know about bankruptcy filings:
If Adelphia initiates a Chapter 11 filing, the U.S. Bankruptcy Trustee will oversee the formation of a creditor's committee to assist in the administration of the bankruptcy. If the Chapter 11 filing indicates that the labor issues are a reason for the bankruptcy, CWA will immediately apply to serve on the committee. Being on the committee allows CWA employees to protect their interests as employees and union members, and to have access to all relevant information concerning the operations of the company.
Even if Adelphia files a bankruptcy petition, the CWA union contract stays in effect without change. The union will continue to process members' grievances as before, and most courts recognize that represented employees have the same right to proceed in arbitrations as before a filing.
Pensions and health benefits will continue as before any filing. The company's obligation to bargain with the union, and employees' rights under the agreement will not be changed by a Chapter 11 petition.
A Chapter 11 filing does contain one important point. Under Section 1113 of the U.S. Bankruptcy Code, a company can move to reject or terminate a labor agreement, if it is necessary to change the union contract in order to allow the company to successfully reorganize under Chapter 11.
Before a company can seek to reject its labor agreement, however, it must give the union access to all relevant information. It must also engage in good faith negotiations to convince the union to accept changes that it says are necessary to allow the company to survive.
The labor agreement can be rejected only if the bankruptcy court determines that the union unreasonably refused to accept company proposals that are deemed necessary to permit it to reorganize its finances.
If there is a filing and the company does indicate an interest in renegotiating the workers' agreement, CWA will inform every member at once. As always, the strength of a union contract comes from the solidarity of the workers and their determination to resist any efforts to undermine their union contract.
