Local Joint Executive Board, Afl-Cio v. Hotel Circle, Inc.

This appeal requires us to address tensions between the language and underlying policies of the Bankruptcy Act and the National Labor Relations Act (NLRA). The district court upheld the decision of the bankruptcy judge relieving Hotel Circle, Inc. (Hotel Circle) from the obligations of a collective bargaining agreement with Local Joint Executive Board, AFL-CIO (Union). Local Joint Executive Board, AFL-CIO v. Hotel Circle, Inc., 419 F.Supp. 778 (S.D.Cal.1976). The Union alleges that the district court erred in defining the scope of section 313(1) of the Bankruptcy Act, 11 U.S.C. § 713 (1), which allows the bankruptcy court to permit rejection of executory contracts of the debtor, and erred in holding that a bankruptcy receiver lacks authority to assume unilaterally or enter into long-term collective bargaining agreements. We affirm.

I

On October 10,1974, Hotel Circle filed for protection under Chapter XI of the Bankruptcy Act, 11 U.S.C. §§ 701 et seq. After the Chapter XI petition was filed, the business was operated by the debtor in possession until a receiver was appointed on July 21, 1975. During this time, Hotel Circle continued to operate under a 1973 collective bargaining…