Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
The Effects of Terminating a Pension Plan in Bankruptcy
Oftentimes, one of the largest commitments of a company is its ongoing funding obligations under its pension plan. Contribution obligations to a company-sponsored pension plan will often influence the timing of a financially troubled company's bankruptcy filing. An example of this is the Chapter 11 case of United Air Lines (United) and its affiliates. United viewed its obligations to make significant contributions to its pension plans as somewhat incompatible with its need to create a fiscally strong enterprise so as to effectively compete with low- cost carriers that do not have the same economic burdens.
United is not alone in having to grapple with its significant pension liabilities. Declining stock prices, low interest rates, and fierce corporate competition (both domestic and foreign) are causing other large financially distressed companies to consider bankruptcy as a means to terminate or modify existing pension obligations.
Although the Bankruptcy Code permits the debtor to modify or reject certain ongoing obligations that burden its rehabilitation, the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code limit the bankruptcy court's authority to terminate certain defined benefit pension plans. Under ERISA, the Pension Benefit Guaranty Corporation (PBGC), was created to, among other things, oversee private defined benefit pension plans and to compensate plan beneficiaries in the event that a pension plan is underfunded. As increasing numbers of financially distressed corporations use bankruptcy as a tool to rid themselves of long-standing pension obligations, the PBGC is forced to pick up the tab resulting from the termination of underfunded plans. The PBGC, therefore, is oftentimes a major creditor in large corporate bankruptcies when the debtor has a significant underfunded pension liability. The timing of the termination of a defined benefit plan can have an enormous impact on the administration of the estate and the debtor's ability to effectively reorganize.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.