Employee Benefits in Bankruptcy Committee

ABI Committee News

Decisions under §1113 in the Northwest Airlines Bankruptcy Case May Have Lasting Consequences

Of the myriad decisions handed down in the recently-concluded Northwest Airlines bankruptcy, none presents more significant issues than those arising out of Northwest’s efforts to achieve labor cost savings from its unionized workforce. Three decisions in particular, two from the bankruptcy court and one from the Second Circuit Court of Appeals, which were precipitated by protracted and often stalemated negotiations with the airline’s flight attendant workforce, may have significant and long-lasting implications for debtors and unions locked in §1113 negotiations. Northwest’s experience will provide potentially important lessons regarding the impact of chapter 11 on distressed labor negotiations.

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Is ERISA’s New Premium for Pension Plans Terminated in Chapter 11 a Claim under Bankruptcy Code §101(5)?

The Deficit Reduction Act of 2005 amended the Employee Retirement Income Security Act of 1974 (ERISA) to create a new termination premium for defined benefit pension plans that terminate under the distress and PBGC-initiated termination provisions of ERISA. Although the due date for the termination premium is generally tied to the date of plan termination under 29 U.S.C. §4048, a special rule applies for cases in which a pension plan is terminated during chapter 11 reorganizations. Essentially, the special rule provides that the termination premium does not arise until after the sponsor’s case is discharged or dismissed. Thus, a debtor whose pension plan is terminated during reorganization proceedings must consider the full termination premiums in creating a post-emergence business plan.

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ABI’s 19th Annual Winter Leadership Conference: Committee Educational Session Agenda

ABI’s 19th Annual Winter Leadership Conference - The Westin Mission Hills Resort & Spa • Rancho Mirage, Calif.

The committee will meet jointly with the Business Reorganization committee on Friday, Dec. 7, from 9:30 to 11:00am on "Section 1114 Issues in Large and Middle-Market Cases."

Speakers include: Charles M. Dyke (Thelen Reid Brown Raysman & Steiner LLP; San Francisco), Trent Cornell (Stahl Cowen Crowley LLC; Chicago), David Jury (United Steelworkers of America; Pittsburgh), Stuart Wohl (Segal Co.; Washington, D.C.) and Andrew Yearley (Lazard; New York).