Ninth Circuit Allows Bankruptcy Discharge of ERISA Withdrawal Liability

The Ninth Circuit recently held that an employer who failed to pay $170,045 in withdrawal liability could discharge the liability in bankruptcy. Carpenters Pension Trust Fund v. Moxley, No. 11-16133 (9th Cir. August 20, 2013). In so ruling, the Court rejected the Fund’s argument that unpaid withdrawal liability constituted a plan asset. The Court distinguished claims for unpaid withdrawal liability, which arise by operation of law when the CBA no longer applies to the withdrawn employer, from claims for unpaid contributions, which arise under the terms of a collective bargaining agreement and could be plan assets where the CBA’s language so provides.