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Saturday, July 17, 2010

Retirees' Bankruptcy Protection Act Applies Over ERISA According to Federal Appeals Court

In a ruling that will apply to all types of retiree employee benefits, a federal appeals court has ruled that a corporation in bankruptcy may not terminate retiree health and life insurance plans unless the company can show that terminating a plan is a necessary part of its reorganization. Even if the language of its benefits plans reserves the right to terminate the plan to the company, it will have to continue the benefit plan(s). The case, In re: Visteon Corp., required the court to determine whether the Retiree Benefits Bankruptcy Protection Act ('RBBPA') should be applied over ERISA, the Employee Retirement Income Security Act, the main federal law that governs employee benefits. The Third Circuit Court of Appeal held that the bankruptcy law applied to all employee benefits. In applying the RBBPPA, the court concluded that Congress meant to give special protection to retired employees in the bankruptcy process.

Comment: This is a significant ruling. Previously, the lower courts that considered this issue allowed employers to terminate their benefit plans whether or not they could show that plan termination was a necessary part of a reorganization. The decision is being hailed as a victory for labor, because the longstanding view was that an employer with a plan that had language which allowed termination in its terms could basically end the plan any time the employer desired. It would not be surprising to see this issue decided by the U.S. Supreme Court in the future.

For the complete story about the case, visit Law.com.

Copyright (c) 2010 by John V. Tucker and Tucker & Ludin, P.A. All rights reserved. For assistance with your Long Term Disability claim, ERISA Disability benefit claim, Social Security Disability claim, or Veterans Disability compensation or pension claim, call Disability Lawyer John Tucker at (866) 282-5260.

1 comment:

camilyn said...

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