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IN RE KLABER BROS.

May 18, 1959

In the Matter of KLABER BROS., INC. Debtor


The opinion of the court was delivered by: LEVET

District 65, Retail, Wholesale and Department Store Union, AFL-CIO (hereinafter referred to as the 'Union') seeks to review and reverse an order of Hon. John E. Joyce, Referee in Bankruptcy, dated March 31, 1959. This order in the above proceeding for an arrangement (Chapter 11) granted a motion of the debtor-in-possession seeking to reject a collective bargaining agreement between the debtor and the Union, dated February 1, 1958.

The Union contends:

(1) That the National Labor Relations Board has preemptive jurisdiction by reason of Section 15 of the Labor Management Relations Act of 1947, Title 29 U.S.C.A. § 165, which reads as follows:

 ' § 165. Conflict of laws

 'Wherever the application of the provisions of section 672 of Title 11 conflicts with the application of the provisions of this subchapter, this subchapter shall prevail: Provided, That in any situation where the provisions of this subchapter cannot be validly enforced, the provisions of such other Acts shall remain in full force and effect. July 5, 1935, c. 372, 15, 49 Stat. 457; June 23, 1947, 3:17 p.m., E.D.T., c. 120, Title I, § 101, 61 Stat. 151.'

 (2) That, assuming the Referee had the power to reject, he abused his power under the circumstances of this case.

 Preemptive Jurisdiction

 The Union's first contention is without foundation. The cited section relates only to Section 672, Title 11 U.S.C.A., which reads as follows:

 ' § 672. Labor and company unions; right to organize or join

 'The right of employees or of persons seeking employment on the property of a debtor under the jurisdiction of the court to join a labor organization of their choice, or to refuse to join or remain members of a company union, shall be free from interference, restraint, or coercion by the court, a debtor, or trustee. It shall be the duty of a debtor or trustee to report to the judge any agreement restricting or interfering with such right, and the judge shall thereupon enter an appropriate order for the termination of such agreement and for notice to the employees that the same is no longer binding upon them. No funds of the estate shall be used by a debtor or a trustee for the purpose of maintaining company unions.'

 This case involves no conflict between Section 672 of Title 11 U.S.C.A. and the National Labor Relations Act (Title 29 U.S.C.A. § 141 et seq.).

 It is clear that there is no intent to limit the application of the authority and power granted to the court in Title 11 U.S.C.A. § 713 to reject executory contracts. The pertinent part of this section is as follows:

 'Upon the filing of a petition, the court may, in addition to the jurisdiction, powers, and duties conferred and imposed upon it by this chapter

 '(1) permit the rejection of executory contracts of the debtor, upon notice to the parties to such contracts and to such other parties in ...


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