Trump Taj Mahal Could Reject Labor Contract

In the first appellate court ruling on an important issue in business reorganizations, the U.S. Court of Appeals for the Third Circuit Jan. 15 ruled that the federal bankruptcy code permits a Chapter 11 debtor-employer to reject or modify labor obligations established in a collective bargaining agreement even after the agreement has expired (In re Trump Entm’t Resorts, 2016 BL 11157, 3d Cir., 14-4807, 1/15/16).

The ruling will give Chapter 11 debtors more leeway to seek court relief from post-contract labor obligations that unions refuse to compromise over. It may also make bankruptcy filings more attractive to ...