by: Mark A. Bogdanowicz
Howard & Howard Attorneys PLLC; Peoria, Ill.
Financially troubled private entities have not cornered the market on unionized labor costs and legacy liabilities. The increase in chapter 9 filings and the highly publicized discussions of potential chapter 9 filings make clear that public entities face these same economic challenges. This article considers the ability of municipal debtors to shed the costs imposed by collective bargaining agreements (CBAs) in light of the recent decision of In re City of Vallejo, 403 B.R. 72 (Bankr. E.D. Calif. 2009) (Vallejo II).
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by: James J. Mazza
Kirkland & Ellis LLP; Chicago
The Second Circuit Court of Appeals held that the pension termination premium charged against companies that terminate their defined benefit pension plans in bankruptcy is not subject to discharge under a confirmed chapter 11 plan of reorganization. See Pension Benefit Guaranty Corp. v. Oneida Ltd., 562 F.3d 154 (2d Cir. 2009). In so holding, the Second Circuit reversed the bankruptcy court’s determination that the pension termination premium arises on account of the debtor’s prepetition actions and found that the pension termination premium instead arises upon discharge and, therefore, cannot be discharged. The Second Circuit’s decision has various implications for companies that have significant “legacy” pension obligations. The decision is not, however, the death knell for restructuring pension obligations in chapter 11. This article takes a brief look at the Deficit Reduction Act of 2005, as well as the Oneida decision and its implications.
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ABI's 28th Annual Spring Meeting will be held April 29-May 2 at the expansive Gaylord National Resort and Convention Center, just moments from Washington, D.C. The Labor and Employment Committee will present a session on Saturday, May 1 at 8:00 a.m. entitled "Litigating the Section 1113 Dispute." Michael L. Bernstein of Arnold & Porter LLP in Washington, D.C. will moderate the session. Panelists will include Hon. Robert D. Drain of the U.S. Bankruptcy Court (S.D.N.Y.) in New York, Sharon L. Levine of Lowenstein Sandler in Roseland, N.J. and David Richard Seligman of Kirkland & Ellis LLP in Chicago. Take advantage of the early bird rates and register today!
Did you miss the Labor and Employment Committee session at last month's Winter Leadership Conference? The recording can now be accessed on the Labor and Employment Committee website under the Materials tab. The session, entitled "Labor Unions in Today's Bankruptcies," featured Hon. William T. Bodoh of Frost Brown Todd LLC in Columbus, Ohio, Brian P. Leitch of Perseus LLC in New York and Richard M. Seltzer of Cohen, Weiss & Simon LLP in New York. Click here to go there now!
