A Call to Companies with PBGC Liabilities: Second Circuit Finds Pension Plan "Termination Premiums" Not Discargeable in Bankruptcy


In a case of first impression issued on April 8, 2009, the Court of Appeals for the Second Circuit held that “termination premiums,” payable to the Pension Benefit Guaranty Corporation (the “PBGC”)[1] under ERISA, are not prepetition claims subject to discharge in a chapter 11 bankruptcy proceeding.[2] Instead, these claims are considered to arise post-petition at the time the debtor is discharged.

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