This article points to the limited role bankruptcy courts have in resolving disputes between labor and a bankrupt company. Despite judicial precedent and recent legislation which allow the rejection of collective bargaining agreements, varying judicial standards, ambiguous legislative intent and the hidden effects on workers and their communities caution against the heavy-handed use of Section 1113 to resolve such tensions.

Various standards have been used in determining the permissibility of rejection or modification of collective bargaining agreements. The 1984 N.L.R.B. v. Bildisco Supreme Court case sought to standardize the conditions under which companies could forego bargaining agreements. Although it decided on a balancing of equities test which weighs motivation, proof of financial difficulty and a showing of true benefit by the company, it was met by a storm of protest from organized labor and Congress and its codification in Section 1113 was ambiguous; its legislative history being sketchy and inconsistent. Subsequent judicial interpretation by the Second and Third Circuits also lacks uniformity.

The author suggests that bankruptcy courts should develop expertise in determining whether good faith bargaining obligations have been meet as this is required in the statute and is the most useful role for the judge. He cautions that the courts must limit their involvement in resolving collective bargaining disputes. If they overstep and inappropriately allow the rejection of agreements, strike may result. The company and the union are in the best position to evaluate the needs of the company and the courts should tread gingerly in this area. Proper application of Section 1113, the author concludes, however, can adequately accommodate the goals and policies of both labor law and bankruptcy law.