Many courts have held this standard to be synonymous with the “business judgment” standard that governed KERPS prior to the BAPCPA which is not as strict as the test under 503(c)(1). John’s Law Student American Bankruptcy Institute Law Review Staff In In re Alpha Natural Resources, Inc., a Virginia bankruptcy court allowed a coal mining company to reject its collective bargaining agreements thereby permitting the company to sell its revenue generating assets. (“Alpha”) is the largest coal producing company by volume in the United States and began to sustain severe financial difficulties after the coal industry began to decline in 2011.
In an effort to stay afloat, Alpha began to cut costs by freezing wages, laying off employees and reducing benefits for non-union employees in 2013.
In its Chapter 11 case, Alpha explored selling its core revenue generating assets to its prepetition lenders (the “Bidders”), who served as a stalking horse for the sale.
The new purchaser hired virtually all the union members under a new Collective Bargaining Agreement and paid all the employees’ post-petition medical and dental claims.
In re: Family Snacks, Inc., Debtor, United Food & Commercial Workers Union, Local 211, Appellant, vs. and Official Unsecured Creditors’ Committee, Appellees and Cross-Appellants (Nos.
00-6076, 00-6077, and 00-6078) Filed January 31, 2001the sale of its assets.
Accordingly, Alpha filed a motion for an order rejecting the collective bargaining agreements.
Alpha’s unions objected to the request, arguing that §§ 11 of the Bankruptcy Code do not apply to Alpha since Alpha is liquidating and those sections address reorganization, and further that Alpha had not satisfied the elements of those same statutes.