WASHINGTON — A bill to specifically prohibit companies that file for bankruptcy protection from canceling retirement benefits guaranteed by a labor contract was approved Monday by the House.
Sponsors said the bill was prompted by an attempt by LTV Corp. to stop payment on health and life insurance benefits to its nearly 70,000 retirees after the company filed for reorganization under Chapter 11 of the bankruptcy code last summer.
The Dallas-based company suspended payment of the benefits on July 17 when it filed for protection from creditors. A federal bankruptcy judge restored payment of the benefits for six months on July 30. The court ruling followed a strike by about 5,000 Indiana steelworkers to protest the company's decision.
'Law Protects Retirees'
"I firmly believe that current law already protects retirees benefits, just like all other benefits in a labor contract, from an employers' unilateral rejection," said Rep. Peter W.Rodino Jr. (D-N.J.), chairman of the House Judiciary Committee.