Protecting Employees and Retirees in Business Bankruptcies Act of 2025

Key Points

• This bill changes bankruptcy laws to make sure employees and retirees are paid what they are owed before many other creditors. It doubles the amount of unpaid wages a worker can claim as a priority from $10,000 to $20,000 and removes strict time limits on when that money must have been earned to be eligible for payment.
• The policy protects people with company pensions and 401(k) plans. If a company's stock value drops because of fraud or if a pension plan is shut down during bankruptcy, workers would have a legal right to claim those financial losses in court, helping them recover retirement savings that might otherwise be lost forever.
• It targets high-level executive pay in failing companies. The bill bans special bonuses for top managers if the company has recently cut worker benefits or severance pay. It also allows the court to "claw back" or take back pay from executives if the company reduces the health or pension benefits it promised to its retirees.
• When a bankrupt company is sold, the bill requires courts to favor buyers who agree to keep current employees and maintain their existing health and pension plans. This is designed to save jobs and prevent new owners from using a sale to wipe out the benefits workers earned over many years.
• It makes it much harder for companies to use bankruptcy as a way to cancel union contracts or stop paying for retiree health insurance. Companies would have to prove to a judge that these cuts are the absolute minimum needed to keep the business running and that the cuts do not unfairly burden the workers compared to management.