American Airlines has announced it will seek bankruptcy court approval to terminate its DB pension plans and switch to a 401(k) plan. The airline will also seek to discontinue subsidizing future retiree medical coverage for current employees, but will offer access to these plans if employees choose to pay for them.
According to many commentators, the Indalex case turns accepted law on the priority of debtor-in-possession (DIP) and working capital security on its head, and introduces new concerns for employers about how to properly discharge their sometimes conflicting duties under corporate and pension law.
New Democrat Pension Critic Wayne Marston reintroduced legislation today to put pensioners ahead of creditors when their former employers go bankrupt. The proposed Pension Protection Act would move pensioners to the front of the line of creditors to be paid out during bankruptcy or restructuring proceedings. Pensions are earned, explains Marston, and should be recognized […]
The United Steelworkers (USW) union has won a landmark legal decision forcing an insolvent corporation to honour pension obligations to employees. The Court of Appeal for Ontario ruled that Indalex Ltd. did not fulfill its fiduciary duties to employees—which include members of United Steelworkers—when the company filed for protection from creditors under the Companies’ Creditors […]