Fairness and Accountability in Reorganizations Act of 2006

H.R. 5113, the Fairness and Accountability in Reorganizations Act of 2006, proposes stricter oversight of executive compensation and worker benefits during corporate bankruptcy proceedings. The bill would require a court to verify that any pay for company "insiders" (such as high-level executives) is reasonable before a reorganization plan can be approved. It also prohibits special retention bonuses for these insiders unless the court determines the payments are essential to the company’s survival or the orderly liquidation of its assets.

For everyday citizens, particularly employees and retirees of struggling companies, this bill aims to ensure that executive pay is not prioritized at the expense of the workforce. It requires courts to consider a company’s entire global network of subsidiaries when deciding whether to allow changes to collective bargaining agreements or retiree health benefits. By increasing transparency and judicial review, the bill seeks to prevent corporate leaders from receiving large payouts while workers face cuts to their wages and healthcare.