TITLE IX--ADDITIONAL PROTECTIONS FOR EMPLOYEES OF BANKRUPT EMPLOYERS

SEC. 901. AVOIDANCE OF CERTAIN TRANSFERS; ALTERNATE PROSECUTION OF ACTION.

Section 547 of title 11, United States Code, is amended by adding at the end the following:

`(h) Notwithstanding subsections (b) and (c), the trustee may avoid a transfer of a debtor's interest in property to any trust or similar arrangement to fund supplemental retirement benefits or other deferred compensation for the benefit of an insider or other management employee made on or within one year before the date of the filing of the petition.

`(i) If the trustee consents or fails to commence a proceeding authorized under section 506, 543, 544, 545, 547, 548, 549, 550, 552, 553, or 724, on request of a party in interest or a committee of creditors appointed under section 1102 of this title, after notice and a hearing, the court may authorize such party in interest or committee of creditors to commence and prosecute such proceeding if the court finds that commencing and prosecuting such proceeding is in the best interest of the estate and for the benefit of the estate.'.

SEC. 902. LIMITATION ON RETENTION BONUSES, SEVERANCE PAY, AND CERTAIN OTHER PAYMENTS.

Section 503 of title 11, United States Code, is amended by adding at the end the following:

`(c)(1) Notwithstanding subsection (b), there shall neither be allowed, nor paid--

`(A) a transfer made to, or an obligation incurred for the benefit of, an insider of the debtor for the purpose of inducing such person to remain with the debtor's business, absent a finding by the court based on evidence in the record that--

`(i) the transfer or obligation is essential to retention of the person because the individual has a bona fide job offer from another business at the same or greater rate of compensation;

`(ii) the services provided by the person are essential to the survival of the business; and

`(iii) either--

`(I) the amount of the transfer made to, or obligation incurred for the benefit of, the person is not greater than an amount equal to 10 times the amount of the mean transfer or obligation of a similar kind given to nonmanagement employees for any purpose during the calendar year in which the transfer is made or the obligation is incurred; or

`(II) if no such similar transfers were made to, or obligations were incurred for the benefit of, such nonmanagement employees during such calendar year, the amount of the transfer or obligation is not greater than an amount equal to 25 percent of the amount of any similar transfer or obligation made to or incurred for the benefit of such insider for any purpose during the calendar year before the year in which such transfer is made or obligation is incurred;

`(B) a severance payment to an insider of the debtor, unless--

`(i) the payment is part of a program that is generally applicable to all full-time employees; and

`(ii) the amount of the payment is not greater than 10 times the amount of the mean severance pay given to nonmanagement employees during the calendar year in which the payment is made; or

`(C) other transfers or obligations that are outside the ordinary course of business and not justified by the facts and circumstances of the case.

`(2) For purposes of paragraph (1)(C), transfers made to, or obligations incurred for the benefit of, officers, managers, or consultants hired after the date of the filing of the petition shall be considered outside the ordinary course of business.'.

SEC. 903. PRIORITIES

Section 507(a) of title 11, United States Code, is amended--

(1) in paragraph (3), by striking `earned within 90 days before the date of the filing of the petition

or the date of the cessation of the debtor's business, whichever occurs first,'; and

(2) in paragraphs (3) and (4), by striking `$4,000' and inserting `$10,000'.

SEC. 904. EFFECTIVE DATE OF TITLE.

The amendments made by this title shall take effect on the date of the enactment of this Act.