Hawaii Attorney Lawyer

In a decision that could affect whether greatest failure of American companies, 3 U.S. Circuit Court of Appeals decided that several pension plans must be aggregated for the purposes of reorganization under Chapter 11

Circuit Judge Marjorie O. Rendell wrote pages 41-Re opinion of the emperor Aluminum Corp. arguments were heard by Rendell April, Judge D. Brooks Smith, Chief Justice and Ruggero J. Aldisert. The opinion was adopted on July 26.

“The case raises an immediate question of first impression among appellate courts: If a debtor Chapter 11 is intended to denounce several pension plans at the same time under the reorganization test should be a court review of each plan separately, or all plans aggregation? ” Rendell wrote.

The opinion of procedure for the applicant’s arguments, Pension Benefit Guaranty Corp., a federal agency in the years 1970, is intended to cover pension plans failed. The Court concluded that, in the absence of a direction of the U.S. Congress about the case to review the plans in their entirety, logic, fair method.

“I think this is a very important precedent,” said Gregory Gordon, a partnership with Jones Day in Dallas and the lead lawyer for the emperor. “There are sectors in financial distress. One is the car industry, as well as automakers and others, on several pension plans. This is the only case in the Circuit Court, that rules on the matter. ”

A spokesman for the PBGC, said his lawyer went to comment, “because the plan aggregation is a common problem in other cases, PBGC.

In his opinion, Rendell said the Tribunal to consider the text of the need Employee Retirement Income Security Act indices of the intention of Congress about this. ”

Rendell pointed out that in each case similar bankruptcy courts have an aggregate analysis, apparently without protest from the PBGC.

The PBGC spokesman took care to emphasize that the emperor was not the first case “in which the PBGC said that the denunciation of the pension plan should be evaluated-plan” and added that he had done in 2005, a fall in Hawaii In the event of bankruptcy captioned Re Aloha Airgroup Inc., and so on.

The emperor case, in which aluminium producers sought to terminate six of its pension plans, was for the first time as Delaware Bankruptcy Court’s early 2004, which, under a reorganization the 3 Circuit opinion said.

The PBGC made this decision with the U.S. District Court for the District of Delaware. In March 2005, Judge Joseph J. Farnan upheld the liquidation.

In its decision, Farnan wrote that the statute - Section 1341 of ERISA - not an explicit mandate approach, for an employee with several plans, and there is no precedent in point “and that these guidelines do are not available, it is not Bankruptcy Act erroneous.According Court found clearly to the conclusion of information on PBGC’s Web site, it was developed under ERISA to ensure the pensions of more than 34 million workers and retired nearly 29000 in the private sector pension plans benefit under their single - Employers Insurance Program.

From 2005, September PBGC had a deficit of $ 22.8 billion for its single-employer pension insurance program.Through their right to after 3 Circuit opinion, the PBGC has been placed on reducing its liability Kaiser’s pension plans. He pointed out that the emperor, four small plans and still meet their obligations under the reorganization.

The minimum amount of financial resources needed for these four projects has been provided about $ 12.8 million between 2004 and 2009, less than 6 percent of the 230 million estimated for all funds of the plans, the opinion sets.

The money for these plans was not the problem. The problem was that “[i] f PBGC We interpretation of Article 1341, we would be necessary to the conclusion that Congress courts on the implementation of the reorganization test on a plan plan, but no guide for the mechanics of this approach Sunday that the principle is not viable. We are not on the construction of a law will lead to the creation of such an abnormal, particularly where the grouping is an alternative approach that is “neither arbitrary nor irrational,” said the opinion, cited a 2005 3rd Circuit case, Teamsters v. DiGiacomo Pension Trust Fund of Philadelphia and the environment.

Among other arguments, the PBGC also said it is neither fair nor equitable, payment of retirement benefits without economic justification.

“Faced with a selection of some of the participants to weigh in Kaiser’s plans and weigh all PBGC argues that equity weighs in favour of the former” 3 Circuit opinion said. “We do not dislike in this opinion. There is certainly a tension between treatment of employees and to do the minimum, which is necessary for the company resulting from bankruptcy. But we are convinced that, overall, an aggregate approach is more in harmony with the objectives of the Bankruptcy Code. ”

The Tribunal has continued to declare that equity as a court, the Court is obliged to insolvency, the most fair and balanced results, but announced a pension plan based on their size would necessarily be in favour of a group of workers through another.

“Without a legal basis or other reasons of principle for this result, such as differences in treatment taste of chance,” Rendell wrote. “It appears to us as a result unjust, and this is a bankruptcy, a court in equity, should not be absent a clear mandate from Congress. ”

Furthermore, it is No. 3 Circuit opinion that the application of Article 1341 of a plan for the basic plan would be easy to make workers’ organizations more reluctant to come on the table so that changes collective agreements, which are often necessary if a company in distress