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Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.

The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)

Government: Pensions
Problem ReferencedProposed Solutions
Commercial Law League of AmericaCommercial Law League of America (CLLA)

The Commerical Law League of America believes that the following issues should be considered by the NBRC: What priority, if any, should the claims of the PBGC be entitled to upon termination of an insured plan To a lien recognized in bankruptcy What should be the role of the PBGC in participating in a reorganization caseThe CLLA believes that these issues should receive high priority (no additional details are provided).
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material

Bankruptcy Code provides adequate protection of employee benefits, but some adjustments are necessary."The PBGC should not get a springing partial lien when the minimum funding payments are not made. Either ERISA should give the PBGC a lien on specific categories of assets or Congress should decide that the minimum funding obligations should be unsecured."
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material

As the PBGC's claims are often among the largest in bankruptcy, they lead to costly and lengthy litigation in numerous cases. Bankruptcy court's have repeatedly rejected priority for these claims, but because the PBGC has colorable arguments for its claims, they PBGC continues to assert the same priorities in every case, notwithstanding the many adverse court decisions.Code should be amended to clarify the existing state of the law and make clear that the claims of the PBGC are not entitled to priority.
National Association of Credit ManagementNational Association of Credit Management ("NACM")

In this statement entitled "Issues Involving Governmental Agencies and Bankruptcy," the NACM expresses the following conerns about government agencies in the bankruptcy process: the role of the Pension Benefit Guaranty Corporation needs to be balanced with the needs of debtors and creditors.Code should be amended to curtail excessive paperwork assocaited with pensions, and unfunded pension benefits should have no rights greater than unpaid obligations to other unsecured creditors.
James J. KeightleyGeneral Counsel, Pension Benefit Guaranty Corporation ("PBGC")
503 and 50728 U.S.C. § 157(d)Sections 503 and 507 are unclear, and need to be reconciled with the various provisions of the Bankruptcy Code, ERISA and the Internal Revenue Code. Also, matters involving substantial and material consideration of both bankruptcy and non-bankruptcy federal law, upon timly motion of a party, must be dealt with by the district court rather than the bankruptcy court under 28 U.S.C. § 157(d). PBGC appreciates being allowed to serve on creditors' committees. PBGC is concerned that the tentative recommendation of the Commission regarding claims classification could lead to abuse and necessitate litigation.. Creditors should not have their claims against third parties extinguished, especially with regard to co-obligors not themselves debtors in cases under Title 11.Sections 503 and 507 should be clarified with respect to their interaction with ERISA and the Internal Revenue Code. Mandatory withdrawl should be retained, particularly in cases in which interpretation of the Bankruptcy Code, ERISA and the IRC are all involved. While examining the fiduciary duties of a debtor in possession ("DIP") that arise upon filing of a chapter 11 petition, the Commission should include those duties that the DIP may inherit under ERISA.
William G. BeyerDeputy General Counsel, Pension Benefit Guaranty Corporation

Author is forwarding a list of several issues of interest to the PBGC for discussion at the Commissions's April meeting.Suggestions are made in the areas of: 1. Duties of the Debtor in Possession; 2. Priorities under Sections 503 and 507; 3. Composition of Creditors' Committees; 4. Classification of Similar Unsecured Claims; and, 5. Discharge of Co-Obligors.


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