The Bankruptcy Code provides restrictions on debtors in bankruptcy seeking to modify, assume or reject collective bargaining agreements and on modification of retiree benefits.

A debtor is to negotiate in good faith with a union in an efforts to reach agreed modifications to a collective bargaining agreement. Only if these efforts fail will a debtor be eligible to seek relief from the bankruptcy court. A debtor may obtain interim relief from the bankruptcy court if the negotiations with a union are lengthy. Until a debtor obtains interim or permanent relief from a collective bargaining agreement, it is obligated to pay wages and benefits in accordance with the collective bargaining agreement. If a collective bargaining agreement is allowed to be rejected in bankruptcy, federal labor laws may require the debtor to resume negotiations with the union for a new collective bargaining agreement.

There are similar requirements for the modification of retiree benefits in bankruptcy. Retiree benefits generally includes plans, funds, or programs provided to retirees and their spouses and dependents for health care, accident, disability and death benefits.