Pensions and Benefits Committee

ABI Committee News

Is Proving Disinterestedness Enough?

Bankruptcy professionals are well-acquainted with the disinterestedness concept.  In most instances, disinterestedness is easily established and work proceeds. But where disinterestedness is challenged, a significant legal battle can ensue. Is it enough to win that battle?

Read the full outline.

Minutes From 2006 Annual Spring Meeting

A joint meeting of the Legislative and Pensions/Benefits Committees was held at ABI’s Annual Spring Meeting. R. Scott Williams of Haskell Slaughter Young & Rediker, LLC opened the meeting with an update on the current status of legislation in Congress, including pension legislation. He advised that Congress missed their self-imposed deadline of April 15 for a reconciliation of the bills passed by the House and Senate. Further, debate is ongoing and Congress hopes for a final resolution of this legislation before adjourning in the fall.

The departing co-chairs of the Pensions/Benefits Committee, Judy Thompson of Poyner & Spruill and G. Ray Warner, professor of law and director of the LL.M. program in bankruptcy at St. John’s University School of Law, introduced the new committee leadership to the membership:

*Carol Connor Flowe – Vice Chair
*Charles Dyke – Newsletter Editor
*Kristin Going – Assistant Newsletter Editor
*John Hall – List-serve Editor
*Daniel Morse – Pension Manual Project Chair

Terrence Deneen, director of insurance programs at the Pension Benefit Guaranty Corporation, and Carol Connor Flowe of Arent Fox gave an overview of the current status of pension/benefit issues with particular attention to the impact of business bankruptcies on the PPGC. Ms. Flowe pointed out that PBGC is currently operating with a deficit of $23 billion, with the total rising daily. She noted that PBGC estimates that there is an additional $450 billion in potential liability not yet asserted. The huge deficits come from the few, very large chapter 11 cases. Fifty-three percent of current deficits come from companies in primary metals and 15 percent come from air transport, with the rest spread across various industries. She predicted that the current troubles in the auto industry promise an ever-increasing burden on retirees and the PBGC.

Mr. Deneen and Ms. Flowe then presented an overview of PBGC issues in bankruptcy, focusing on minimum-funding contributions, pension-plan terminations, and the amount and priority of PBGC’s claims. Mr. Deneen emphasized that the agency believes that the decisions in US Airways and United Air Lines, which upheld the use of PBGC’s discount rate for calculating its claims after rejecting several older decisions that reached the contrary result, will be followed in future cases.This will mean much larger PBGC claims.

Members of the audience were encouraged to become involved with the new Pensions/Benefits Committee. The co-chairs announced that there are multiple opportunities to write for the various publications on Pensions/Benefits issues and invited anyone interested to contact them. The Pension Benefits Committee is currently preparing a program for the Winter Leadership Meeting in December 2006.

The Legislative Committee is continuing to monitor various legislative efforts regarding bankruptcy currently pending before Congress. At this time, it appears highly unlikely that any substantial bankruptcy revisions will pass before the end of the legislative session.