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Multiple pension plans should be considered in the aggregate for purposes of reorganization under Chapter 11, the 3d U.S. Circuit Court of Appeals has ruled in a decision that could have far-reaching implications if more large American companies file for bankruptcy. “The instant case raises a question of first impression among the courts of appeal: When a Chapter 11 debtor seeks to terminate multiple pension plans simultaneously under the reorganization test, should a court apply the test to each plan independently, or to all of the plans in the aggregate?” Circuit Judge Marjorie O. Rendell wrote for a three-judge panel. The opinion proceeded to consider the arguments of the appellant, Pension Benefit Guaranty Corp. (PBGC), a federal corporation set up in the 1970s to cover failed pension plans. The court concluded that, in the absence of instructions from Congress on the matter, to consider the plans in aggregate is the most logical, equitable method. In re Kaiser Aluminum Corp., No. 05-2695. Rendell wrote that the court looked to the text of the Employee Retirement Income Security Act “for indicia of congressional intent on the issue.” She noted that in every similar case identified, bankruptcy courts have applied an aggregate analysis, “apparently without protest from the PBGC.” A PBGC spokesman said that Kaiser was not the first case “in which the PBGC has asserted that pension termination should be judged plan-by-plan.” It had done so in a 2005 case in Hawaii bankruptcy case captioned In re Aloha Airgroup Inc., among others.

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