Editorial: Reforms Must Shore Up Private Pension System
Federal lawmakers rightly have set their sights on curing the nation's ailing private pension system. A rising tide of corporate collapses could leave 40 million workers without promised retirement benefits and taxpayers with a huge bailout bill. Right now, the pension system has the equivalent of a bad cold. The government must take care that the medicine it wants to administer doesn't bring on fatal pneumonia, an editorial in the Grand Rapids Press said on Saturday.
Last week, the Senate approved a measure that would force companies to fully fund their pension plans within seven years. The legislation also would increase the financial resources of the federal agency that insures those plans. Both measures are reasonable and sensible, designed to put the Pension Benefit Guaranty Corp. (PBGC) and private pension plans back on solid footing. Other provisions, such as special relief for the airline industry and penalties for companies with low credit ratings, warrant more scrutiny and discussion. Airlines would be given 20 years to fully fund their pension plans. Lawmakers need to explain what justifies that special dispensation. Read the editorial.
The Pension Problem
Kay Pippin is hoping for the best, but expecting the worst. Pippin is executive director of the Chamber of Commerce in Henry County, an affluent and fast-growing community south of Atlanta that is home to about 3,000 employees and retirees of Delta Air Lines Inc. Delta's financial woes and subsequent bankruptcy leave the economic future of those people very much in doubt, the Atlanta Business Chronicle reported yesterday. "What happens to the Delta family affects all of us. This is going to have a serious trickle-down effect," Pippin said.
Delta's job cuts already have hurt. By early next year, the airline will have shed more than 30,000 employees, or nearly 40 percent of its pre-2001 work force. But greater uncertainty awaits as Delta, its lawyers and the federal bankruptcy court determine what will happen to the pensions of retirees, many of whom spent 30 years or more building what they thought was a secure nest egg.
The potential economic fallout is staggering, experts say. A senior pilot, for example, could expect to receive up to $7,000 per month in pension benefit upon full retirement. Delta says it pays benefits to about 5,800 recipients, roughly one-third of whom live in metro Atlanta. That's an annual infusion to the local economy of nearly $200 million a year. Add in payments to nonpilot retirees and the ancillary impact on local businesses that provide goods and services, and the figure approaches $1 billion. And that's just the beginning. Read more.
Delphi Worker Fears Bankruptcy Is the End of Good Life
For nearly three decades, Michael Balls has made a good living as a laborer and a pipefitter for General Motors Corp., then Delphi Corp., at Saginaw's venerable steering systems plant just off Interstate 75. But he's worried that Delphi's decision to file for bankruptcy could end the good life for him and thousands of other factory workers if the nation's largest auto parts supplier wins the right to slash pay and benefits, the Associated Press reported Saturday.
Now, at 48, he's not quite old enough to retire and fearful that Delphi will cut his wages if he stays on. He's especially worried that Delphi won't be able to meet its pension obligations. Read the full story.
OPINION: Toyota Chips Away at GM
Toyota Motor Corp. is moving steadily closer to its goal of unseating General Motors Corp. as the world's leading automaker, the CarConnection.com reported yesterday. In fact, with General Motors (GM) preparing to slash production capacity in North America by 1 million units over the next three years, Toyota is actually running ahead of the ambitious schedule laid out in the 2010 Global Vision document that the Japanese automaker published in the spring of 2002.
Right now, the consensus is that GM will hang on to the top spot for 2006—but after that, Toyota will replace the company on the charts. "We aren't forecasting that Toyota will surpass GM next year," says John Tews of J.D. Power & Associates. Greg Gardner of Harbour Consulting noted that Toyota is expected to build 8.1 million vehicles this year, while GM's worldwide production will reach 9 million units.
However, Toyota, which has already edged out the Ford Motor Co. to become the world's second-largest automaker, is moving steadily closer to GM. Only two days after GM announced that it planned to close nine factories and eliminate 30,000 jobs by the end of 2008, the Japanese press reported that Toyota was pressing Fuji Heavy Industries to start building Toyotas in 2007 in a Lafayette, Ind., assembly plant. The underutilized Indiana plant is operated by Fuji's wholly owned subsidiary, Subaru. Read the full analysis.
NEW: BLOG ON BAPCPA
ABI World is now home to a blog on the latest case law interpreting the bankruptcy amendments. Created by David L. Rosedorf, ABI member and a shareholder at Miami’s Kozyak Trupin & Throckmorton, the ABI BAPCPA Blog provides regular commentary, analysis and an opportunity for you to post comments. Recent posts have covered the various homestead opinions, credit counseling, revised automatic stay provisions and the interim rules. Check out the blog here, and feel free to weigh in.
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2005-06 ABI MEMBERSHIP DIRECTORY PRINT EDITION AVAILABLE FOR PURCHASE
The print edition of the 2005-06 ABI Annual Membership Directory is now available. This 1,000-page edition lists more than 11,000 insolvency professionals. An online version of the Directory is available at the ABI World Web site, which is continually updated. All members received a complimentary CD-ROM version of the Directory with their November ABI Journal.
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In Time for the New Law: The Consumer Bankruptcy Manual (Second Edition)
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