In Svenhard’s Swedish Bakery v. United States Bakery, Bk. No. 19-15277, 2023 WL 5541420 (9th Cir. Aug. 29, 2023), the Ninth Circuit held that a settlement agreement that resolved an employer’s withdrawal liability to a multiemployer pension fund was not an executory contract that could be assumed and assigned to a third-party when that employer subsequently filed for bankruptcy. The decision is instructive for multiemployer funds and employers that negotiate settlement agreements to resolve these types of liabilities.

Background

The Court of Appeal has resolved previously conflicting case law to confirm that a bankrupt cannot be obliged to crystallise his pension benefits in order to produce income to pay off creditors.

The recent Court of Appeal decision in Rawlinson and Hunter Trustees SA & others v Akers & another [2014] serves to emphasise that third party reports commissioned by liquidators to enable them to consider whether litigation should be commenced in order to make recoveries for the benefit of creditors will not always attract litigation privilege.

In re Visteon Corp., No. 10-1944-cv, 2010 WL 2735715 (3d Cir. July 13, 2010), the Third Circuit held that Visteon Corporation (Visteon) could not terminate unvested retiree health and life insurance benefits during a Chapter 11 bankruptcy without seeking court approval pursuant to Bankruptcy Code § 1114, 11 U.S.C. § 1114. The Third Circuit’s decision departs from the rulings of many other federal courts, and is in tension, if not outright conflict, with the Second Circuit’s decision in LTV Steel Co. v. United Mine Workers (In re Chateaugay Corp.), 945 F.2d 1205 (2d Cir.