David, please tell me why labor contracts seem to be the first to go. In the case of theaters, labor costs are not particularly high -- especially with the multiplexes. I speak as someone who used to take tickets back in the 50s.
On Thu, Sep 22, 2005 at 10:17:33AM -0700, David B. Shemano wrote: > You (and others) don't have to believe me, but I am not making this up. > Under the Bankruptcy Code, corporations have the right to "reject" ((stop > performing under) essentially ALL of their contracts. For instance, in the > US, almost every theater chain when through chapter 11 several years ago for > one reason -- get out of bad real real estate leases entered into when the > chains overexpanded. There was nothing the landlords could do. Corporations > file chapter 11 to get out of disfavorable supply contracts. The list goes > on, and there is nothing the non-debtor party can do. Alone among contracts, > there are special rules making it difficult for corporations to get out of > collective bargaining and pension agreements. In order to stop performing > under these agreements, the corporation must essentially present financial > projections to the Bankruptcy Court that demonstrate the corporation will > have to liquidate unless the agreements are modfified. The unions, retirees, > PBGC all have the opportunity to respond and demonstrate alternatives. There > are actually very few cases where the corporations have successfully modified > those agreements. Those cases are often large and get a lot of attention, > but they remain rare overall. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
