Now employees are considered unsecured creditors when a company enters bankruptcy, which makes them the last to receive any share of a bankrupt company’s assets. According to the Associated Press (AP) however, this could possibly change.
Senator Jay Rockefeller and Representative Nick Rahall, both West Virginia Democrats, have introduced legislation barring coal companies from evading their financial obligations under the 1992 Coal Act to finance employee health care for retired miners. A companion bill will also be introduced that would extend such employee protection to workers in other industries outside the coal sector, according to the AP.
The move is aimed expressly at Horizon Natural Resources, according to the AP. The Ashland, Kentucky-based company filed for bankruptcy in November 2002, and US Bankruptcy Judge William Howard voided Horizon’s contracts with industrial unions, claiming that they made the company seem an unattractive investment to potential purchasers. With the ruling, Horizon dumped $800 million in the health insurance and pension obligations of 800 current employees and 2,300 retirees in four states, according to the AP.
Rockefeller’s Senate proposal, the Bankruptcy Fairness Act, s 1970 is here .