At the Intersection of ERISA and the Bankruptcy Code: Withdrawal- Liability Disputes in Ch. 11 Cases
There is a case for that.1 Foreign privacy law precluding discovery of materials that are ordinarily discoverable in the U.S.? There is a case for that, too.2 Federal securities laws, state police powers,3 the list goes on. [...]the recent bankruptcy filing of Yellow Corp., 4 conflicts between the E...
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Published in | American Bankruptcy Institute journal Vol. 43; no. 9; pp. 28 - 50 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Alexandria
American Bankruptcy Institute
01.09.2024
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Subjects | |
Online Access | Get full text |
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Summary: | There is a case for that.1 Foreign privacy law precluding discovery of materials that are ordinarily discoverable in the U.S.? There is a case for that, too.2 Federal securities laws, state police powers,3 the list goes on. [...]the recent bankruptcy filing of Yellow Corp., 4 conflicts between the Employee Retirement Income Security Act of 1974 (ERISA) and federal bankruptcy law received far less prominence. [...]conflicts do come up, particularly where a debtor/employer's withdrawal from a multiemployer pension plan causes a withdrawal-liability dispute, which is often complicated by the need to balance competing objectives of ERISA and the Bankruptcy Code. "6 Pursuant to ERISA, Congress also created the Pension Benefit Guaranty Corp. (PBGC), a nonprofit federal corporation under the Department of Labor that provides termination insurance to MEPPs.7 Shortly after ERISA became law, "Congress became concerned that a significant number of MEPPs were experiencing extreme financial hardship" and directed the PBGC to prepare a report analyzing the problem and recommending a solution.8 The PBGC's report found that ERISA did not adequately protect MEPPs from the adverse consequences of employer withdrawals9 and recommended new rules imposing withdrawal liability for employers that withdraw from MEPPs.10 In response, Congress enacted the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA).11 As its legislative history reveals, "[t]he primary purpose ... is to protect retirees and workers who are participants in such [multiemployer] plans against the loss of their pensions. "29 In In re HNRC Dissolution Co., the Sixth Circuit Bankruptcy Appellate Panel held that withdrawal liability is "not entitled to priority as an administrative expense." Since "the calculation of a plan's unfunded vested benefits, and, consequently, the assessment of withdrawal liability against a particular employer, will always be a function of numerous factors that are not, and cannot be, directly linked to the post-petition work," it "undercut the assertion that the prorated liability resulted from a 'direct and substantial' benefit to the estate. |
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ISSN: | 1931-7522 |