Headlines about "Bankruptcy"

Gathered from the web by the editors at BenefitsLink.com.
Personal Fiduciary Liability Under ERISA: Your Obligations Can Follow You Into Bankruptcy (PDF)
"In the past, bankruptcy allowed fiduciaries to essentially abandon their plan administration duties. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) ... explicitly imposed plan administration duties on panel trustees and put an end to the abandonment of retirement plans by bankrupt employers.... BAPCPA [also] allowed the [DOL] to change its role in bankruptcy from retirement plan 'caretaker' to retirement plan 'collector.' In bankruptcies in which employee contributions are missing due to defalcation, the DoL is now using its resources very effectively to recover those missing monies." (Lockton)

PBGC Working to Help Employers Maintain Pensions In Addition to Role as Pension Payment Insurer
"To help counter the growing retirement crisis for today's workers, the [PBGC] has recently begun to spotlight its often-unnoticed mission 'to encourage and preserve retirement plans of U.S. companies.' ... That's what it did recently by working with AMR Corp. ..., the parent of American Airlines, to convince the airline to freeze, instead of terminate, its traditional pension plans covering 130,000 workers and retirees, as part of its bankruptcy proceedings." (Human Resource Executive Online)

PBGC and American Airlines Strike Deal on Frozen Underfunded Pension Plans
"The agreement removes PBGC's threat of litigation as long as the pension plan freezes do not unravel as the airline addresses other parts of its collective bargaining agreements. According to the [PBGC], [American]'s four defined benefit plans have assets of $8.3 billion and liabilities of $18.5 billion, and officials at the agency, which sits on the airline's creditors committee, have pressed American to avoid terminating the plans." (Pensions & Investments)

PBGC Statement on the Bankruptcy of Hawker Beechcraft, Inc.
"'[PBGC is] committed to working with Hawker Beechcraft and its creditors so that the company can reorganize successfully, while also maintaining the retirement security of its nearly 20,000 workers and retirees.' Collectively, Hawker Beechcraft's three pension plans are 56 percent funded, with $769 million in assets to cover $1.4 billion in benefits. If Hawker Beechcraft ended the plans, PBGC would pay $533 million of the $611 million shortfall." (Pension Benefit Guaranty Corporation)

Stockton, California Bankruptcy Would Public Employee Pensions and Bondholders Nationwide
"Under a new California law governing municipal distress, Stockton has entered into a mandated mediation period before it can file for bankruptcy under Chapter 9.... Stockton faces an avalanche of obligations that it cannot meet. Foremost among them are contributions to public employee pensions, as well as debt service on bonds earlier sold to fund its pension contributions." (Governing)

Can a Public Pension Plan File Bankruptcy? Historic Northern Mariana Islands Chapter 11 Case Might Tell
"[A motion was filed recently] on the behalf of two anonymous retirement plan participants, arguing that the plan cannot file for Chapter 11 restructuring because it's not a person under the bankruptcy code and because it's a governmental unit.... [An attorney said] that by filing for bankruptcy, the fund was permitting the local government to avoid its obligation to its retirees." (Investment News)

American Airlines to Make Its Case Against Union Contracts Before Bankruptcy Judge
"American wants to eliminate 13,000 union jobs -- about one in every four union workers -- freeze or terminate pension plans, curb health benefits, reduce time off, and impose many other cuts. The airline's unions say company leaders are unfairly blaming workers instead of doing something to make American grow and bring in more revenue." (The Sacramento Bee)

Bailout by U.S. Taxpayers Could Resolve Northern Mariana Islands Retirement Fund Bankruptcy
"There are times when a pension story is one thing for the general public, and a totally different thing for the ERISA community, or in this case the employee benefits community because the plan involved is not truly an ERISA plan, it is a governmental plan, and not really even a governmental plan but a retirement fund for a commonwealth of the United States." (The Pension Protection Act Blog)

Trouble in Paradise: Public Pension Plan of U.S. Commonwealth in Pacific Files for Bankruptcy
"[The Northern Mariana Islands Retirement Fund, Saipan] is only 38.8% funded, thanks to low investment returns and a benefit structure that's been increased without raises in funding, according to the bankruptcy filing.... [The f]und has been bedeviled by the commonwealth's inability to make its share of contributions to the pension plan, according to court documents and an April 17 letter to participants." (Pensions & Investments)

[Guidance Overview] Court Finds Jurisdiction Exists over Foreign Parent in Pension Plan Liability Suit
"A recent federal district court decision defeats a long-standing assumption that a foreign corporate parent would not be subject to personal jurisdiction for a suit seeking payment of pension liabilities merely by acquiring a U.S. subsidiary." (McDermott Will & Emery)

Court Says PBGC Owes Interest to US Airways Employees for Delay in Making Pension Payments
"[The U.S. Court of Appeals for the District of Columbia] affirmed a ruling that a 45-day delay [by the Pension Benefit Guaranty Corporation] in making a lump-sum payment from a U.S. Airways pension plan is unreasonable. An analysis U.S. Airways conducted during the 1990s found calculation of a lump-sum payment took, at most, 21 business days[.]" (PLANSPONSOR.com)

[Guidance Overview] Debtors in Bankruptcy Could Not Begin Making Post-Petition Contributions to 401(k) Plans Following Repayment of Plan Loans
"Income that becomes available to debtors following the repayment of a 401(k) plan loan is projected disposable income that must be paid to their unsecured creditors and may not be used by the debtors to begin making voluntary contributions to the plan, according to the U.S. Court of Appeals [for the Sixth Circuit]." (Wolters Kluwer Law & Business / CCH)

American Airlines to Freeze Pension Plans
"In a big change of position, American Airlines Inc. said Wednesday that it intends to freeze -- not terminate -- at least three of its four massively underfunded pension plans." (Business Insurance)

PBGC Web Site on American Airlines Pensions
"On March 7, 2012, AMR announced it would freeze, not terminate, the pensions of its non-pilot employees. That means going forward workers won't earn additional benefits, but they won't lose a dime they've already earned." (Pension Benefit Guaranty Corporation)

American Air Pension Battle May Spread
"Josh Gotbaum, the PBGC's director, has mounted an unusual public campaign against American, arguing that the airline hasn't made the case that it needs to terminate the plans. That question will be decided in bankruptcy court, but American's story puts a spotlight on broader questions about the future of traditional pensions. These include whether corporations should be able to use bankruptcy court to shed pensions; how to balance the stresses businesses face in tough times against their retirement promises to workers; and the future health of the PBGC itself, which faces a record $26 billion long-range deficit accrued from pension failures over the extended recession." (Reuters)

PBGC Doubts Need of American Airlines Parent to Terminate Defined Benefit Plans
"Since AMR's bankruptcy, [the PBGC Director] has repeatedly and publicly challenged the airline to justify why it needs to ditch its pension plans. 'There are reasons why we think this ought to be doable (without terminating pensions),' Gotbaum said. 'We're going to push really hard to see whether (AMR) needs to dump pensions as part of it.'" (Chicago Tribune)

Kodak Wants to Cut Retiree Health Benefits
"The Eastman Kodak Co. is filing a motion in bankruptcy court to end health coverage for some retirees. A hearing on the motion will be held next month in New York City. The company is seeking to cut health care coverage for most Medicare-eligible retirees." (WIVB.com)

[Guidance Overview] Protection from Creditors Sometimes Not So Clear for IRAs of Michiganders (PDF)
"What would appear to be a clear reading of the statute is anything but. Courts will reach a result that does not appear to be in compliance with the statute but may, in the end, be equitable." (Miller Canfield)

American Airlines Pension Default Q&A
"What can you expect if your own employer's plan were to be terminated or frozen? Here's a Q&A on the pension issues raised by the American Airlines bankruptcy." (Reuters)

PBGC Semiannual Regulatory Agenda Addresses Cash Balance Plans, Missing Participants, Rollovers, Airline Plans
"The Pension Benefit Guaranty Corporation . . . has released its semiannual regulatory agenda for Fall 2011, which outlines regulations that have been selected for amendment during the next year." (Wolters Kluwer Law & Business / CCH)

PBGC Updates Estimate of Funding Relief for American Airlines
"Congress gave American Airlines an estimated $2.1 billion in pension funding relief over the past six years, nearly double an earlier estimate, the PBGC announced [February 6]." (Pensions & Investments; free registration required)

PBGC Updates Estimate of Funding Relief for American Airlines
"Congress gave American Airlines an estimated $2.1 billion in pension funding relief over the past six years, nearly double an earlier estimate, the PBGC announced Monday." (Pensions & Investments; free registration required)

PBGC Faces $17 Billion in Liabilities If AA Terminates Plans
"The PBGC, though, would not be liable for all pension benefits earned by the airline's employees and retirees. The maximum annual benefit -- payable at age 65 -- guaranteed by the PBGC is $54,000 for plans that terminated in 2011, and nearly $56,000 for plans terminating this year." (Business Insurance)

Providence Is Now on 'the Brink of Bankruptcy,' Mayor Taveras Warns
"Taveras said the city's retirees must accept reduced pension and health care benefits to save the city from financial ruin. A decree signed in 1991 by Mayor Buddy Cianci pushed the city's pension liability 'into the stratosphere' by giving annual cost-of-living increases of 5% and 6% to more than 600 retirees, he said." (WPRI.com)

Is My American Airlines Pension Guaranteed? Yes, But...
"Who gets the haircut? The PBGC has a sliding scale of maximum benefits, depending on age. The most it will pay people who retire at age 65 is $55,841. If your benefit is less than that you have only the long-term health of the PBGC to worry about." (TIME.com)

Unions Shocked By American Airlines Proposed Cuts
"The company -- which is in bankruptcy -- also wants to reduce salaries by 20 percent and end its pension plan." (National Public Radio)

American Airlines Wants to Terminate All Four of Its Pension Plans
"If it does take over the plans, the PBGC will assume the responsibility for paying retirees' benefits -- but not necessarily all of them. The agency caps the monthly benefit it pays at $4,500 a month for plans ended in 2010. It has said about $1 billion in promised benefits to the highest-paid AMR retirees would not be paid." (Star-Telegram.com)

PBGC Files Liens Against Assets of American Airlines
The PBGC has filed $91 million in liens against assets of American Airlines, which has hinted that it might freeze or terminate its four defined benefit pension plans as part of its bankruptcy reorganization, according to the Associated Press. (AP via New York Times)

AMR Retirees Ask to Participate in Bankruptcy Case
"A group of non-union AMR retirees asked a federal bankruptcy judge to let them participate in the bankruptcy case of AMR, American Airlines and other AMR subsidiaries." (PLANSPONSOR.COM)

PBGC Responds to American Airlines' Letter on Employee Pensions
"The American letter also downplayed the pension cuts that would occur if American's plans are terminated and PBGC benefits are substituted. Although the figure appears nowhere in the management letter, the airline itself estimates that some 13,000 current or retired employees will have their pensions cut." (Pension Benefit Guaranty Corporation)

PBGC Responds to American Airlines' Letter on Employee Pensions
"The Pension Benefit Guaranty Corporation today pushed back on misleading statements to American Airlines employees by its management about their pension plans. 'American Airlines is telling their workers and retirees not to worry, but they should,' said J. Jioni Palmer, PBGC's director of communications." (Pension Benefit Guaranty Corporation)

American Airlines Works to Ease Employees' Pension Fears
"American Airlines says more than 90 percent of its workers with vested pensions would not see reduced benefits even if the Fort Worth-based airline terminates its pension plans." (Fort Worth Star-Telegram)

Bankruptcy a Pension Reprieve for Some Companies
"The most controversial feature of the latest round of bankruptcies is that Hostess, Kodak and AMR want to use bankruptcy to relieve them of their pension promises. . . . AMR is expected to start the process of canceling American Airlines' pensions that cover pilots, mechanics and other workers. The PBGC says the plan has a $10 billion shortfall and wants AMR to fulfill its pension promise." (USATODAY.com)

American Airlines Makes Reduced Pension Payment
"American Airlines' parent company has made only a small fraction of the roughly $100 million payment it was scheduled to contribute to the company's employee pension plans. AMR Corp. instead contributed just $6.5 million by the January 15 deadline, the [PBGC] said, according to the Wall Street Journal." (PLANSPONSOR.COM)

Kodak Retirees Fear for Benefits
"For many Eastman Kodak Co. retirees, the company's financial trouble is shaking the very foundation on which they built their careers, lives and nest eggs. . . . While retirees have reason to be worried about their health care, their pensions should be safe, according to several financial experts." (www.democratandchronicle.com)

Keep Pension Plan for American Airlines' Flight Attendants, Says Union
"American, whose parent company, Forth Worth, Texas-based AMR Corp., filed for Chapter 11 bankruptcy reorganization in late November, has not said whether it intends to terminate or freeze its pension plan covering flight attendants or its three other pension plans." (Business Insurance)

Hostess Returns to Bankruptcy over Pensions
"Twinkies and Wonder Bread maker Hostess Brands Inc filed for bankruptcy protection for the second time in less than three years, after failing to reach an agreement with workers on pension and health benefits." (Reuters via The New York Times; free registration required)

Retirees Accept Pension Cuts in Rhode Island Town's Bankruptcy
"In a landmark agreement, retired police and firefighters in Central Falls, Rhode Island, have accepted pension cuts as part of the town's historic bankruptcy filing. If the bankruptcy trustee accepts the proposed deal, Central Falls' public employees would represent the first workers to ever accept pension cuts during a municipal bankruptcy, according to a recent report from the New York Times." (TotalBankruptcy, LLC)

Retired Central Falls, Rhode Island, Police and Firefighters Have Agreed to Sharp Pension Cuts
"As cities, towns and counties struggle with fiscal pain, there has been speculation that they could shed their pension obligations in bankruptcy. Some have said it might, in fact, be easier for local governments to drop those obligations than it is for companies, which use a different chapter of the bankruptcy code." (The New York Times; free registration required)

American Airlines' Bankruptcy: What Does It Mean for Its Pensions?
"While no announcement has been made yet about what might happen to the pension plans, it's important that American Airlines employees and retirees be aware of what could happen if the PBGC takes over the plans." (Pension Rights Center)

American Airlines' Bankruptcy Unlikely to Transform the Industry Into a Profitable One
"Almost all the nation's big airlines have steered a course into Chapter 11 over the last decade. They all shared one main objective: getting out from under labor contracts they claimed they could not afford." (The New York Times; free registration required)

American Airlines Answers Pension Questions
"American Airlines filed for bankruptcy last month. Saturday, employees past and present were given peace of mind about their pensions, after a special meeting at the Spirit Bank Event Center. . . . American held a special meeting Saturday for those employees to discuss the effects, if any, that the filing could have on their pay checks." (WorldNow and KOTV)

U.S. Representative from Ohio Seeks to Expand Probe into Delphi Pensions
"'Local leadership of the Delphi Salaried Retirees in my district estimate that nearly 20,000 current and future retirees across the nation and 1,000 retirees in the Dayton area were negatively affected by the decisions of the Treasury, Auto Task Force and the PBGC,' [Representative Turner wrote]." (Cox Ohio Publishing)

American Airlines Pensions a Rich Target in Bankruptcy Proceedings
"One option for American would be to lobby Washington for more time to pay off its pensions, as Northwest and Delta received in 2006. Those rule changes also included a new penalty: Bankrupt companies that terminate pensions must later pay $1,250 per participant per year -- for three years." (StarTelegram)

Sale of Pension Income Targeted By Senator
"A U.S. Senate committee is considering tackling a burgeoning and controversial business in which veterans and other retirees sell some of their future pension income to investors, with an array of middlemen profiting from the transactions. . . . [F]inancial middlemen have helped to set up websites with names such as BuyYourPension.com and pension4cash.com to connect pension recipients." (Wall Street Journal)

PBGC Audit Finds Errors in Calculating Pensions in Bankruptcies
"The errors appear to have come about because the agency . . . used unqualified outside vendors to review the pension plans it took over, then failed to supervise the contractors adequately or verify the accuracy of their work. The audit firm, Clifton Gunderson, referred to 'serious internal control weaknesses' in its report." (The New York Times; free registration required)

Health Care Employers with Unaffordable Pension Plans: A Non-Bankruptcy Solution
"During these financially challenging times, . . . employers providing healthcare services are finding that the skyrocketing costs of funding their defined benefit pension plans are increasing operating pressures to the point of threatening their viability and ultimate survival. This article addresses this problem . . . and identifies an under-utilized legal solution that could mitigate or even eliminate a major issue that for many of them is becoming an existential financial threat. [Click on the link under 'Items of Interest' on the target page.]" (Keightley & Ashner LLP)

For Now, Kodak Backs Off on Retiree Health Benefit Cuts
"Eastman Kodak Co. retirees facing possible cuts to their company-provided health care coverage have some additional breathing room. The company, in a filing Wednesday, sought U.S. Bankruptcy Court approval for creation of a retirees committee to represent their interests through Kodak's Chapter 11 process. Kodak also said it was yanking a previous motion seeking to end the Medicare Advantage plan it provides to post-1991 retirees who are eligible for the government health insurance program." (Democrat and Chronicle)

[Guidance Overview] Certiorari Denied So Court of Appeals Decision Stands; PBGC Must Pay Interest to Participants in Terminating US Airways Plan
"Though limited to the D.C. Circuit, Stephens v. US Airways now stands as a warning that delayed payouts of ERISA benefits may draw claims for interest -- unless those delays are tied to administrative processes." (Morgan Lewis)

Personal Fiduciary Liability Under ERISA: Your Obligations Can Follow You Into Bankruptcy (PDF)
"In the past, bankruptcy allowed fiduciaries to essentially abandon their plan administration duties. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) ... explicitly imposed plan administration duties on panel trustees and put an end to the abandonment of retirement plans by bankrupt employers.... BAPCPA [also] allowed the [DOL] to change its role in bankruptcy from retirement plan 'caretaker' to retirement plan 'collector.' In bankruptcies in which employee contributions are missing due to defalcation, the DoL is now using its resources very effectively to recover those missing monies." (Lockton)

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