In a decision that comes as welcome news to some employers, the Ninth Circuit Court of Appeals recently ruled that an employer that incurred withdrawal liability to a multiemployer pension plan had not become a plan fiduciary by failing to pay the withdrawal liability, and could discharge that liability in bankruptcy.
When a franchisee files for bankruptcy, a franchisor naturally has concerns over how the process will affect the parties’ relationship. Of particular concern is the possibility that the franchisor will be forced into a relationship with an unacceptable successor as a result of a bankruptcy judge’s decision to authorize assumption and assignment of the franchise agreement over the franchisor’s objection.
On October 16, 2013, the U.S. Bankruptcy Court for the Central District of California ruled that the City of San Bernardino is eligible for protection under chapter 9 of the Bankruptcy Code. In re City of San Bernardino, Cal., Case No. 12-28006, 2013 WL 5645560 (Bankr. C.D. Cal. Oct. 16, 2013).
One of the ironic issues for failing banks has been the fact that banks that they have had to continue to deal with their borrowers and depositors in the ordinary course of business even though they are already in the queue for resolution by the FDIC. So for example, loans continue to get renewed and documents executed. What happens if you renew a loan shortly before the bank fails, do you have some sort of defense to enforcement of the loan when the successor bank or the FDIC makes demand on you?
An employer that sponsors a single-employer defined benefit pension plan was acquired by a Japanese parent. The employer entered into bankruptcy and, as part of the proceedings, the Pension Benefit Guaranty Corporation (the “PBGC”) terminated the pension plan. The PBGC then sought in federal court to recover the amount of the unfunded liability from the Japanese parent. The PBGC also sought payment of the termination premium designed to be payable when a reorganizing company emerges from bankruptcy and to collect that premium from the parent. The pare
In a recent Ninth Circuit case, Carpenters Pension Trust Fund for Northern California v. Moxley, 2013 WL 4417594 (9th Cir. 2013), the court held that an employer's withdrawal liability was dischargeable in bankruptcy. In this case, the employer filed for bankruptcy protection after the Pension Fund assessed withdrawal liability.
In Burcam Capital II, LLC v. Bank of America, N.A., et al, No. 13-00063-8 (Bankr. E.D. N.C. Oct. 1, 2013), an adversary proceeding filed in In re: Burcam Capital II, LLC, No. 12-04729-8, in the United States Bankruptcy Court for the Eastern District of North Carolina, the court held that the Debtor Plaintiff alleged sufficient facts to support a claim that its lender and the special servicer of the loan breached their duty to act in good faith and to deal fairly.
The Bottom Line:
A liability insurance company has the right to take over the defense of a policyholder and to control all settlement discussions. What happens if the carrier fails to pursue settlement negotiations with sufficient zeal, knowing full well that it was leaving the insured exposed to liability above policy limits? You may be at risk in California if your insurer does this to you.