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question if and when it springs into an enforceable existence." As to the objections actually raised, the court concluded that none had any merit and affirmed the district court's order approving of the settlement agreements.
* DiFelice v. U.S. Airways, Inc., 497 F.3d 410 (4th Cir. Aug. 2007) (Motz, J.)
Chapter 11 debtor did not breach ERISA fiduciary duties by cancelling its company fund.
The Fourth Circuit affirmed the district court's summary judgment in favor of the chapter 11 debtor in an action brought by several employees invested in the company fund. Employees of the debtor argued that because the company cancelled its "company fund" investment option (a fund consisting solely of company stock) shortly after filing its chapter 11 petition, the company had breached its fiduciary duties under ERISA. The court held that the company satisfied its duty of prudence by regularly monitoring the company fund and by cancelling the option to invest in the fund once it was no longer viable. Furthermore, the court held that the company met its duty of loyalty under ERISA because: the company appointed an independent entity to maintain the 401(k) plan options once reorganization became inevitable; the employees had a wide variety of other investment options under the company's 401(k) plan; the employees had been warned in advance that the company fund option was the riskiest of the plan options; and the employees at all times had the unfettered ability to exchange their fund shares for other plan options. Once the 401(k) plan fiduciary decided that the company fund was no longer viable, the fund was liquidated, and the employee shareholders were given the opportunity to invest in other plan options.
* Oneida Ltd. v. Pension Ben. Guar. Corp., 372 B.R. 107 (S.D.N.Y. July 2007) (Cedarbaum, J.)
Who can decide whether new premiums due under amended ERISA were discharged?
A reorganized debtor sought a declaration that premiums due under ERISA (as amended by the Deficit Reduction Act of 2005) were discharged by the order confirming the chapter 11 debtor's plan of reorganization. No problem, said the district court, because the issue required only a "simple application" of the ERISA amendments. Bankruptcy courts routinely determine whether certain obligations are pre-petition claims or post-confirmation obligations. And, this application of federal law requires nothing more. Thus, the district court held that mandatory withdrawal was not warranted. Furthermore, the court noted that the adversary proceeding was a core matter and that no other factors warranted discretionary withdrawal.
* Oneida Ltd. v. Pension Ben. Guar. Corp., 383 B.R. 27 (Bankr. S.D.N.Y. Feb. 2008) (Gropper, J.)
Whether new DRA premiums are dischargeable in bankruptcy turned on the debtor's pre-petition discussions with the PBGC. After the district court ruled that the bankruptcy court was the proper place to litigate the issue, see supra, Judge Gropper concluded that the PBGC's claim for DRA premiums, in fact, were discharged by the confirmed plan, which satisfied PGBC's $21 million claim with a $3 million secured note. First, the court had little trouble finding that the premiums due under ERISA were contingent "claims." The DRA created a statutory obligation to pay the PBGC a premium if the debtor terminated its pension
