by Michael Fox
In an era where more and bigger companies favorite chapter is often 11, the 3rd Circuit gets first shot at determining the standard when a corporation is trying to emerge from bankruptcy and leave multiple pension plans (and pensioners) behind. To do so, a company must meet the "reorganization test"--- basically showing that it cannot pay its debts and operate outside the bankruptcy court unless the pension plan is terminated. The wrinkle in this case -- Kaiser was trying to ditch multiple plans and no appellate court had yet decided whether one should consider the plans one by one as the PBGC argued or aggregate them, the company's position. The Court's view, aggregate them. In re Kaiser Aluminum (3rd Cir. 7/26/06) [pdf].
I don't know enough about either bankruptcy or ERISA to hazard an opinion as to whether this is correct -- but given the importance of the answer this seems ultimately to be an issue for the Supreme Court. Which could explain the in depth analysis given by the Court in its 41 page opinion.