On June 14, 2011, the Pension Benefit Guaranty Corporation (PBGC) published its final rule on the termination of an underfunded pension plan when the sponsor is in bankruptcy. The final rule is substantially the same as the proposed rule published in 2008. The Pension Protection Act of 2006 (PPA) amended the rules for a single-employer pension plan termination when the contributing sponsor is in bankruptcy.

One exception to the otherwise far-reaching scope of the automatic stay is the “police power” exception, which permits a governmental unit to commence or continue an action or proceeding that is in furtherance of its police and regulatory powers (section 362(b)(4) of the Bankruptcy Code). In the past, bankruptcy courts have held that the “police power” exception extends to actions taken by the Pension Benefit Guaranty Corporation, the agency charged with protecting pension benefits in private-sector defined pension plans.

Ohio-based, 102-year-old automobile parts manufacturer Dana Corporation and 40 of its subsidiaries filed for chapter 11 protection in the U.S. in March 2006. Dana’s operations, however, extend well beyond the borders of the U.S. — the company has 46,000 employees in 28 countries. Integrating a complex restructuring of Dana’s U.S. operations in chapter 11 with Dana’s extensive operations and obligations abroad has posed some unique challenges to Jones Day’s restructuring professionals.

From theory to practice, planning to enforcement, the answers to 42 of the most frequently asked questions can help you prepare, cope or respond to a restructuring. This Client Alert answers some of the most frequently asked questions with respect to the treatment of pension-plan liabilities and other post-employment benefits (OPEB) obligations in US bankruptcies. Understanding the treatment of pension and OPEB obligations in bankruptcy continues to be important in today’s business environment and the law relating to the treatment of these obligations continues to evolve.

A federal district court recently rejected the Pension Benefit Guaranty Corporation’s attempt to hold a buyer of assets liable for the seller’s unfunded defined benefit plan liabilities under a successor liability theory.[1] While the court decided the issue in favor of the buyer, it is a cautionary tale for buyers as it appears to be the first time the PBGC has argued for the application of successor liability in this context and is a depar

On June 6, 2016, the Pension Benefit Guaranty Corporation (“PBGC”) issued a new proposed rule clarifying the agency’s authority to facilitate the merger of multiemployer pension plans. The rule would implement some of the statutory changes made by the Multiemployer Pension Reform Act of 2014 (“MPRA”).

Background

As attention shifts from the global financial crisis of 2008–2009 to the global sovereign crisis that currently is affecting much of Europe, lawmakers are scrambling to create new laws and regulations designed to stave off the next financial crisis.[1] Meanwhile, a different threat quietly has been growing in America's states, cities, towns, municipalities, and other political subdivisions.

A district court rejected the prudent investor rate theory and applied the Pension Benefit Guaranty Corporation (PBGC) discount rate to determine the amount of a PBGC termination liability claim. Wolverine, Procter & Schwartz, LLC v. Lynn F. Riley, 2010 WL 1236298 (D. Mass. 2010). This case demonstrates a recent trend among courts. In the 1990s and 2000s, several courts found that an unfunded benefit liability claim may be recalculated in bankruptcy using a "prudent investor rate" to determine the present value of plan liabilities.

CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND v. O'NEILL BROS. TRANSFER & STORAGE (August 31, 2010)

On July 13, 2010, a three-judge panel of the United States Court of Appeals for the Third Circuit unanimously held that auto-parts supplier Visteon Corporation could not terminate health and life insurance benefits for approximately 2,100 retirees during its chapter 11 bankruptcy unless Visteon followed the specific requirements laid out in section 1114 of the Bankruptcy Code, even if Visteon would have had the unilateral right to terminate these benefits outside bankruptcy.1 The Court found that a debtor may terminate any retiree benefits in bankruptcy only if,inter alia, the debt