In a huge win for labor, a federal appeals court has ruled that a corporation in bankruptcy cannot terminate its retirees’ health and life insurance benefits — even if its ERISA plan explicitly reserved its right to unilaterally terminate such benefits — unless it can show that doing so is a necessary part of its reorganization plan.
The 95-page decision from the 3rd U.S. Circuit Court of Appeals in In re Visteon Corp. promises to alter the playing field in big corporate bankruptcies by mandating compliance with Section 1114 of the Retiree Benefits Bankruptcy Protection Act without exception.
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