Bankruptcy Judge Stuart Bernstein
Debtor Journal Register Co. is a party to collective bargaining agreements (CBAs) with the Newspaper Guild/CWA (INI Guild) and Detroit Typographical Union No. 18 (INI ITU). The agreements, expiring March 31, 2013, have identical "successor" clauses conditioning sale of Debtor’s "operation" on the buyer’s assumption of its CBA obligations. On Nov. 29, 2012, debtor agreed to sell its assets to 21st CMH Acquisition Co. (Buyer), under Bankruptcy Code §363. Buyer will not assume any CBAs. The two labor unions objected because Buyer will not assume Debtor’s CBA obligations. Discussing In re Agripac, the court found that, as a general proposition, a sale under Bankruptcy Code §363 cannot circumvent a condition imposed under a successor clause absent compliance with §1113. However, under the unique circumstances of the case, the court overruled the unions’ objections. The subject successor clauses conditioned the sale or transfer of Debtor’s "operations" on the successor’s assumption of their CBA obligations for the remaining life of the CBAs. If the CBAs expire before the sale, there will be no remaining life and no obligations to assume. Further, Bankruptcy Code §1113 does not apply after a collective bargaining agreement terminates.
