Court Overturns Bankruptcy Order Allowing Airline to Reject CBA

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Court Overturns Bankruptcy Order Allowing Airline to Reject CBA

Post  JoeC (McGruff) on Fri Jul 24, 2009 1:02 pm

The recent Teamsters v. Frontier Airlines, No. 09-343, in which the Federal District Court for the Southern District of New York found that a bankruptcy court had improperly applied Section 1113 of the Bankruptcy Code in permitting Frontier to walk away from its collective bargaining agreements with its technicians and other workers. That section of the Bankruptcy Code permits a bankruptcy court to allow a debtor to reject CBAs, but only if rejection is necessary to successful reorganization and the debtor has previously attempted to negotiate with the union in good faith. The District Court found that contract modification proposals and disclosures that Frontier made after it had requested rejection didn't count towards the good-faith requirement -- good faith requires that proposals and disclosures be made before petitioning the bankruptcy court for permission to reject the CBA.
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