is to leave the court with four points the first is that withdraw liability under the m p p a is not the product of what section five of three the bankruptcy code call services rendered after the commencement of the case and i put the emphasis on the word rendered because  injures put particular emphasis on that as to determining whether or not compensation for services could fall within at administrative expense   it's our position that no portion of it can be recognized as an expense before you get into the merits could you address the standard of review please because in h and r c the bankruptcy  see there was a full hearing on not simply the legal issue of whether or not the withdraw liability to be included as an administration expense but also on how not put before the bankruptcy court any computation or any the allocation between pre and post official expenses you had a pure decision of law by the bankruptcy court you had a reversal of that decision of law by the district court with a remained to the bankruptcy court to get into the factual issues up the second point i'd like to leave the court with is that the withdrawal liability is that we are in chapter eleven so we're dealing with the debtor as debtor in possession and the veteran possession has the obligation to do sherry obligation to the creditors i want to say to minimize because that's incorrect but the optimize expenses of administration the only that a policy argument no your honor it is both policy argument and a legal  if it's focused it least admittedly in part on policy would not the same logic apply to workers because without the workers there would be no better position in business i don't think that's correct you because there aren't possessions obligation in the current creditors committee case which dealt with the standing of creditors committees to pursue  fraudulent transfer applications the court noted that the debtor in possession is in something of the position of the fox in the henhouse it is the incumbent management but its duty is not simply to manage in the self interest of itself and the owners but the manage the business in the interests alternately of a successful reorganization one in which the enterprise continues if that's economically feasible and in which value is maximized for the creditors bearing in mind that because we're in bankruptcy bankruptcy is by definition shared pain there will never be enough to go around for everybody but it's the better position to make the best of a bad situation and what that would choir's it to do is to control the amount of them in the straight expenses and decide whether or not to undertake them on a cost benefit analysis to for example with labor costs put on or take off an extra shift depending on whether that's going to be profitable in the mcfarlane's case out of the second circuit for example the debtor wound up withdrawing from a multi employer plan because  decided that the unit of its business that was represented by unionized employees or participants in the plan wasn't worth continuing in it simply discontinued the that business and the discharge the employees and what that leads to is that because the debtor can't control the amount of withdrawal expenses with full withdrawal liability in the way that it controls administr incentive on the debtors part to withdraw from the plan early which is contrary not only to the bankruptcy code but is contrary to the policy in the m p p a a point i'd like to employees of the debtor at all no ever but the general and p p a intent is for all of the employees to protect the pensions  employers get out and in pay nothing exactly employer's believing the plan was in trouble and getting yeah yeah it's a deterrent to withdraw all its arsenal he employer give employers an incentive to remain in the play the bankruptcy context however the incentive works the other way if an employer the trigger for a liability under the n p a the five year look back of your year is the end of the plan here immediately preceding the then under the n p t under arrest itself only fifty percent of that becomes a general expense it's all none of it is priority under twenty nine u s c fourteen  five b congress's which is part of a risk and not part of the bankruptcy code congress has declared that half of it becomes an expense of administration and the other half is subordinate to the other general creditors so that it's advantageous to general creditors for the employer to withdraw at the outset of the proceeding or even immediately before the proceeding has a pushing withdrawal liability down but you're assuming that the employer will melt five years and now that it's and again they're bankrupt prudence would dictate that they ought to withdraw right before filing because then it would all be a preposition expense and debtors don't really care about preposition expenses you because it's all goes into the hopper for the creditor your honor his phrase my point is reframe my point exactly so if you make it an expense of the ministration what happens at that point is that first of all the employer may not want to do this because that's will be terribly disruptive of labor relations we were going to zation is supposed by the employer time it's got one hundred twenty days in which to propose a plan if it makes that decision immediately it's already disrupted the operations of the  senior all right big bit you agreed do you not that the salaries paid to the workers the truckers here post petition are administrative expenses under section five zero three salaries wages etc are necessary to the preservation of the state yes salaries are and i will confer that normal pension contributions are all right so is the difference so you know the company the dip is operating  wants the truckers to keep driving and making money for the dip and the dip is paying these a vested pension benefits aren't you asking us to allow the dep't to have its cake and eat it too by not contributing a dime withdrawal liability no your honor because here's the difference first of all there's a direct relationship between hours of work and both the wages and the normal pension contributions the depends the issue in this case couldn't we articulate a rule of law that that provides some commensurate relationship between your withdrawal liability and the amount of new vested pension benefits created is to examine the size of the pie none of the side which is the amount of unflustered i'm on the best of benefits none of the size of the pie relates to the amount of work done by the debtors employees post petition it relates employer goes into chapter eleven maintains operations for two years and at the end of two years withdraws from the multi employer plan either by when the employer does that the pending one stay the market you'll get an entirely different with all liability have the same employer same amount of work done but if you have a withdrawal date in two what why should why should a company not in bankruptcy have to suffer the hazard and the dip is exempt from that hazard the did is getting direct benefits by having these employees work and creating new vested pension benefits for those working that's not in bankruptcy the employer's obligations to its all of its creditors are what they are bankruptcy is intrinsically going to involve a reduction in obligations to creditors second of all well i'm sorry i'm sorry i have to challenge you on that though because preposition i'm with you because petition it's a new ballgame and that's why dips have to pay one hundred cents on the dollar to their investment bankers their lawyers and all the other people that keep working for the deposed petition why are these truckers treated differently bot what they pay their employees post taishan and to their investment bankers they're professionals and the like those are contractual expenses those are either voluntarily assumed by the gauge professionals or when you agree with break up fee for a buyer or the depass control of it by controlling the amount of insurer of the stock market if the market goes up its withdrawal liability goes down can't be more ready to come down you cannot be paraded your honor that's the difference between the size of the pie and the slice of the pie district court has required to be done is three things first of all you have to determine the size of the pot which is the amount of unfocused vested benefits and that's going to be based in very large part on investment performance and entirely on it would not for two reasons first of all before i answer that question can i finish the third point in response to your last question which is that the third task which the bankruptcy court has now with the best record is now required to be done is that you have to slice the slice you have to take the debtors share of the total unfunded vested benefits which is the slice of the pie and you have to apportion that between pre and post official liabilities and the only way i think you can do that is to look at what withdrawal liability would have been if it had been done of the petition and then to look at what withdrawal liability was at the date of the actual withdrawal and to allocate that push but if you do then what that means is let's assume the market has gone up it can be there's no with all liability because the unfunded vested benefits as of the withdrawal date are less than the unfunded vested benefits would have been if we sending a message to the employees to not to go out of the shop to work once for that is no reason for that is that one they're receiving their wages to their receiving because the employer the debtor is not liable for pension benefits the fund is liable for the pension benefits the fund as other resources which is the other continuing employers and ultimately the fund do in terms of not going to work is that one of the principles of chapter eleven the principle that underlies cramdown in section eleven twenty nine b is that something is better than nothing  in the theory employees could say or the union could say unless the debtor promises upfront that it will pay all withdraw liability as an expense of administration we are going to walk out immediately but if they do that they lose their wages they lose their normal contra pension contributions and they probably kill the reorganization so i would suggest that this is it's within the policy of bankruptcy and it's within the policy of a reciprocal section eleven forty four with the expressly states that a risk that those not override will impair any other law of to morning your eyes it's paul martin bought on behalf of trucking employees of north jersey pension fund it please the court i always thought administrative expenses were what is needed right now for the entity to continue the electricity wages because you need him or how it is with  on is not understanding how withdrawal liability plays a part of this what i was going to first start explaining is that of course arista and the multi player pension plan act is a remedial statute  what is a direct and substantial benefit to the state and who is providing these benefits it is the employees that are providing these benefits by providing their labor to the estate to do the work of the estate as i outlined in the brief the debtor or debtor in possession had the ability to because we provide that to transportation systems we drove the trucks we delivered their products to their customers  possession had the ability to choose how to handle how they were going to do their transportation system now they had a collective bargaining agreement with the union the collective bargaining agreement with the union said that they would take certain amount of wages they would pay health insurance and they would pay a pension benefit right now it's important to understand that the pension benefit that's involved here is a defined benefit not a defined contribution now we heard the appellant say but your honors we paid the normal pension contributions there is no such thing as a normal pension contribution he admitted a normal pension contribution is a minute stated expense but in a defined benefit plan a normal pension contribution is the cost that is required to be paid to pay for a year of pension credit with eem pellant this is in essence saying is we want to pay a certain dollar amount only we'll call that the normal pension contribution defined benefit into a defined contribution we just want to pay x amount of dollars per hour and that's the end of it but that's not what the collective bargaining agreement calls for that's not what the agreement was with the employees the employees would work and they would have a payment made to their pension fund and they would receive a defined benefit but they're still going to get it i mean that's it isn't that one of the the difficulties you have to deal with here is that even if we rule against you and even if we say that there is no withdrawal liability whatsoever your clients get one hundred cents on the dollar because the liability falls to the fund and if the fund can't satisfy its liability then it falls to the taxpayers through the pvc let me make it clear that my client is the funds not the individual employees or  appends through their work with the employer are obligated at the fund is obligated to give them a pension credit if they work that he or that employer the fund has to come up with the money somehow now this is one of the that the pension fund subsidise the creditors and the debtor in possession by requiring the pension fund and when i heard him say it during his argument but the employees are not getting hurt they're going to be required the pension funds will be required to fund that pension fund anyway which is things are fine and more standing than anyone the fund has an interest here but the fund this the firm has an interest but the employees it's a strange case because the employees are not getting hurt matter what happens here the fund gets for if we rule for mark out that's exactly right the funding gets weird because already they don't have the money in order to pay for the pension funds right but here's the difficulty markel could care less about the fun or kill needs the guys to drive the trucks and do the work the fund why worry about the fun right so from the company's perspective the dips perspective the actual necessary costs of administering the estate are just paying the employees not taking care of this distant creditor has a legal obligation to get the full amount given or lent and but the problem is that the employer is bankrupt and can't pay it now and may not be able to pay it or may pay only ten percent depending market plan album i don't know what the legal obligation gets you let me marry again let me explain that if the debtor at the time they file the petition were to terminate the collective bargaining agreement now there's no longer that obligation for the fund to buy a pension credit during the time of th possession let's assume the debtor in possession operates for five years if they're under the collective bargaining agreement the pension fund is obligated to pay a defined benefit with those five years of service if the debtor in possession it does not appear to terminates the collective bargaining agreement that the filing now the pension fund is not required to provide that pension benefit to those employees and it's up to the union changes first and if they don't are not successful in the go sharing changes they can repudiate a collective bargain which allows a pension fund to be out and no incurred no further liability they did not do that the rule it strikes me that you've argued for a five year look back in your reply brief well what i think talked about in the reply brief is the a risk or the method calculation of what which are a liability is now we have we can't be a five year lookback can it because consider a situation where the dip operates for five years under your proposal in your reply brief if the dip is in business for thirty years it incurs all kinds of withdraw liabilities making all kinds of pension contributions through its payments to its employees during that thirty years and then it files and it operates as a dipper five years if we adopt your rule then the entire with will draw liability is going to be the five years of post petition operation that can't be the rule can it oh that would be the statute statutory application absolutely the definition of here's the letter the problem with that though the they haven't created enough new vested benefits post petition to cause their entire withdraw liability to cover the thirty five year period  benefits at the time and with which you're a liability is always a moving continuum and we heard that discussion earlier and it is in the case law that it's a moving continuum and you have to take a look at where you're going to apply the none of it would be unsecured pre position despite the thirty years worth of payments which just because it's thirty years of pension credit those credits may have been properly funded and the which your liability deficit or the unfunded liability may have occurred during the last five years it is it's uncertain you have to take a look at each particular fund and we heard market fluctuations or actuarial experiences but bottom line is that the statute forward under  forth a very detailed formula of how to apply it the question is in this situation how much obligation would be apportioned to the debtor possession as an administrative expense during an accrued their need administrative period and that issue has not been decided by the court because we have reached that issue and that was what was remanded so i don't know going further on that as shines as one question yes in terms of your argument ho not going to place that obligation on as administrative expense it takes a look it takes a look at the from the wrong point of view the pension fund got to remember the pension fund is out here and not part of the bankruptcy their obligation is to fund this pension credit that is earned during the course of the administrative process it's partly the pension credit is the compensation they withdraw liability is the cost of that compensation and i think that that's how you square this the funds argument here h and r c had it all wrong they said you have with equities you have to understand that the pension fund is obligated under the collective bargaining agreement but is not a party to the collective or you very much the collective bargaining agreement is between the union and the debtor in that's correct it is in effect the c v a is in effect collective bargaining agreement as i thought you know it was and imo you was agreed to was it not for at the start of the bankruptcy there were nine and a half months left at the collective contract actually under i believe it's bankruptcy section eleven thirteen f they under the a section in debtor in possession has the ability to assume or to reject under f they're obligated to continue to adhere to the collective bargain agreement until they make such an application to either negotiate it changes to it or to then move to set it aside and didn't they create a new agreement d m o you or i mean what occurred after the nine and a half months when the collective bargain green by its own terms expired they continued to meet and they continued they reached an agreement that we would continue to adhere to those terms and conditions and one of those terms and conditions of course was to participate in the pension fund and to make the contributions to the pension fund the but the pension fund is in essence the tail here the pension fund as it was earlier mentioned is obligated now to fund this benefit for these individuals and what we hear from the administrative and from the debtor in possession they don't care how you find it we don't want to be responsible for funding our own employees obligations to that fund and i think the bottom is that i'd like leave here with this to have the court understand that the pension fund should not have to subsidize and that's an essence what this would be doing if it's not recognize as a administrative expense subsidize the operation of the debtor in possession on behalf of all the other credit very briefly a couple of points the first is that i think that mr montalvo has conceded that the fund who he represents and who is the creditor in this case did not perform services directly to the bankruptcy a state that's not the test of you know b doesn't say directly this is the actual necessary costs and expenses and isn't it true that we could conceive of necessary costs and expenses that are in fact indirect well as the excuse me as the at least by the bankruptcy courts in this circuit i have in the brief a couple of delaware decisions a requirement that the service is directly in substantially benefit the estate and what we have in this situation is that the employees are compensated not by payments from the employer or the employments or compensated by pension credits the employer is obliged by the collective bargaining agreement to make normal payments normal payments to the not hold that the withdrawal liability was not administrative expense because it was too complicated to calculate but because the terms of that calculation the size of the pie depend on factors that have no relationship to the amount of services performed and also because the beneficiaries are in very large part persons other than the employees of the debtor who provided the services i cannot wrong i think i think the answer to that your honor is not that it can't be calculated there are a variety of formulas you might use the one being the one that i mentioned earlier which is the difference between what withdrawal liability would