F I L E D

United States Court of Appeals

Tenth Circuit

AUG 3 1998

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

In re: CF&I FABRICATORS OF

UTAH, INC., et al.

 Reorganized Debtors.

PENSION BENEFIT GUARANTY

CORPORATION,

Appellant,

v.

CF&I FABRICATORS OF UTAH,

INC.; COLORADO & UTAH LAND

COMPANY; KANSAS METALS

COMPANY; ALBUQUERQUE

METALS COMPANY; PUEBLO

METALS COMPANY; DENVER

METALS COMPANY; PUEBLO

RAILROAD SERVICE COMPANY;

CF&I FABRICATORS OF

COLORADO, INC.; CF&I STEEL

CORPORATION; COLORADO &

WYOMING RAILWAY COMPANY;

UNSECURED CREDITORS

COMMITTEE; UNITED

STEELWORKERS OF AMERICA

AFL-CIO-CLC; WILLIAM J.

WESTMARK, Trustee of the Colorado

& Wyoming Railway Company,

Appellees.

No. 97-4121
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In re: CF&I FABRICATORS OF

UTAH, INC., et al.

 Reorganized Debtors.

PENSION BENEFIT GUARANTY

CORPORATION,

Appellant,

v. No. 97-4122

CF&I FABRICATORS OF UTAH,

INC.; COLORADO & UTAH LAND

COMPANY; KANSAS METALS

COMPANY; ALBUQUERQUE

METALS COMPANY; PUEBLO

METALS COMPANY; DENVER

METALS COMPANY; PUEBLO

RAILROAD SERVICE COMPANY;

CF&I FABRICATORS OF

COLORADO, INC.; COLORADO &

WYOMING RAILWAY COMPANY,

Appellees.

 

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

(D.C. Nos. 93-CV-744-B and 96-CV-202-B)

Susan E. Birenbaum (James J. Keightley, General Counsel; William G. Beyer,

Deputy General Counsel; Israel Goldowitz, Assistant General Counsel; Garth D.

Wilson, Attorney; Nathaniel Rayle, Attorney; and Kenneth J. Cooper, Attorney,

Pension Benefit Guaranty Corporation, Office of the General Counsel,

Washington, D.C.; and Charles G. Cole, Steptoe & Johnson, L.L.P., Washington,

D.C., with her on the briefs), Assistant General Counsel, Pension Benefit

Guaranty Corporation, Washington, D.C., for Appellant.
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Frank Cummings (Steven J. McCardell, LeBoeuf, Lamb, Greene & MacRae,

L.L.P., Salt Lake City, Utah; Weston L. Harris and Steven T. Waterman, Ray,

Quinney & Nebeker, Salt Lake City, Utah; Joseph E. O’Leary and Scott A. Faust,

Choate, Hall & Stewart, Boston, Massachusetts, with him on the briefs), LeBoeuf,

Lamb, Greene & MacRae, L.L.P., Washington, D.C., for Appellees Reorganized

CF&I Fabricators of Utah, Inc., et al.

Richard M. Seltzer (Ann E. O’Shea, Richard A. Brook, and Mimi Hart, Cohen,

Weiss and Simon, New York, New York; Carl B. Frankel and Paul Whitehead,

United Steelworkers of America AFL-CIO-CLC, Pittsburgh, Pennsylvania, with

him on the briefs), Cohen, Weiss and Simon, New York, New York, for Appellee

United Steelworkers of America AFL-CIO-CLC.

Before PORFILIO, MCKAY, and TACHA, Circuit Judges.

PORFILIO, Circuit Judge.

In this appeal we are asked to determine whether claims for a Chapter 11

debtor’s minimum contributions to an employee pension plan are entitled to tax or

administrative priority in bankruptcy. In addition, we must determine which

valuation method should be used to calculate the present value of unfunded

benefit liabilities owed by CF&I Steel Corporation and its subsidiaries (CF&I),

Appellees-Debtors in this case. 
-4-

This inquiry comes to us because of a conflict between provisions of the

Employee Retirement Income Security Act (ERISA) and the Bankruptcy Code. 

Appellant Pension Benefit Guarantee Corporation (PBGC), a private

governmental corporation modeled after the Federal Deposit Insurance

Corporation and charged statutorily with protecting and preserving private

pension plans, seeks to recover sums by way of priority claims from CF&I’s

Chapter 11 bankruptcy estate. PBGC bases its rights to bankruptcy priority

chiefly upon powers and rights vested in it by ERISA, but not the Bankruptcy

Code. The major controversy between the parties is whether the ERISA

provisions carry over into bankruptcy or whether PBGC comes to Chapter 11 like

any other unsecured creditor. After consideration of all the arguments, we

conclude PBGC is not entitled to special rights in bankruptcy and its ERISA

powers and rights do not give it priority over the other unsecured creditors of

CF&I’s estate. 

A. Background

Prior to the economic events which eventually led CF&I into Chapter 11, it

sponsored a defined benefit pension plan subject to the termination provisions of

Title IV of ERISA. An employer’s choice to initiate such a pension plan is totally

voluntary; however, once that plan is established, the employer must meet the
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minimum funding standards prescribed in the Internal Revenue Code (IRC) and

ERISA. Moreover, the employer must meet these standards until its plan is

terminated either voluntarily by the employer or involuntarily by PBGC.

CF&I met its funding obligations until a decline in economic conditions of

the American steel industry left it unable to make minimum funding contributions

of approximately $14 million. This state of affairs led CF&I into filing a 

Petition for Relief under Chapter 11 of the Bankruptcy Code.

CF&I continued to operate its businesses as debtor-in-possession and made

substantial contributions to non-PBGC insured employee benefit plans providing

health and life insurance. Although CF&I made no contributions to its pension

plan, it did not seek voluntary termination. Finally, when the assets of the estate

dwindled, PBGC terminated the plan and became its statutory trustee. See 29

U.S.C. § 1342 (“The [PBGC] may institute proceedings under this section to

terminate a plan whenever it determines that ... the plan has not met the minimum

funding standard required under section 412 of Title 26 ....”).

Subsequently, CF&I achieved confirmation of a negotiated plan of

reorganization which, among other provisions, set aside a sum of money as an

“Appeal Fund” preserving PBGC’s right to pursue its claims against that fund. 

PBGC has agreed to limit its recovery, if any, to the amount set aside.
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PBGC filed two claims against the estate. The first was in the amount of

$64,874,511 for CF&I’s unpaid contributions to the benefit plan. The second was

in the amount of $263,200,000 for unfunded benefit liabilities accruing because

of the lack of assets in the benefit plan. For reasons we shall discuss later, PBGC

asserted its claims were entitled to priority payment as a tax claim and were a cost

of the estate entitled to priority as an administrative claim. 

The bankruptcy court held PBGC was entitled to an administrative priority 

claim for the post-petition component of its unpaid contributions claim

attributable to post-petition services of employees. However, the court denied tax

priority or administrative priority for amounts other than these post-petition costs. 

The district court affirmed these decisions.

However, the district court reversed the bankruptcy court’s holding that

PBGC’s unfunded benefits claim, which must be reduced to present value to be

allowed, should be valued in accordance with PBGC’s regulatory system and not

by Bankruptcy Code standards. Finding an inexorable conflict between ERISA

and the Bankruptcy Code, the court held the Bankruptcy Code must dominate. 

Hence, it concluded, “the actuarial present value of guaranteed benefits in a

reorganization context [must be] determined according to bankruptcy law.” On

remand, the bankruptcy court applied the “prudent-investor” valuation method and
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allowed PBGC a general unsecured claim in the amount of $124,441,000 as the

present value of CF&I’s unfunded benefit plan future liabilities.

On appeal to this court, PBGC contends the district court erred by denying

tax priority to its first claim based on unpaid past plan contributions in excess of

$1 million and administrative priority to its entire claim for unpaid plan

contributions. It also contends the court erred by refusing to use PBGC’s

regulatory methodology to determine the present value of the unfunded benefits

claim.

B. Tax Priority

PBGC argues because of specific provisions in ERISA, we should conclude

Congress expressly directed that CF&I’s unpaid minimum funding contributions

in excess of $1 million must be treated as taxes and accorded tax priority under

the Bankruptcy Code. The district court’s denial of tax priority is a conclusion of

law which we review de novo. Broitman v. Kirkland (In re Kirkland), 86 F.3d

172, 174 (10th Cir. 1996).

PBGC’s argument is grounded upon 26 U.S.C. § 412(n)(1)(B) which

provides, when unpaid minimum funding contributions exceed $1 million, “then

there shall be a lien in favor of the plan ... upon all property, whether real or
1

See 26 U.S.C. § 4971(a), which states:

Initial tax.–For each taxable year of an employer who

maintains a plan to which section 412 applies, there is hereby

imposed a tax of 10 percent (5 percent in the case of a multiemployer

plan) on the amount of the accumulated funding deficiency under the

plan, determined as of the end of the plan year ending with or within

such taxable year. 

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personal, belonging to such person ....” Moreover, 26 U.S.C. § 412(n)(4) (1990)

adds: 

(B) Period of lien. -- The lien imposed by paragraph (1) shall arise on the

60th day following the due date for the required installment ....

(C) Certain rules to apply -- Any amount with respect to which a lien is

imposed under paragraph (1) shall be treated as taxes due and owing the

United States and rules similar to the rules of subsections (c), (d), and (e)

of section 4068 of the Employee Retirement Income Security Act of 1974

shall apply with respect to a lien imposed by subsection (a) and the amount

with respect to such lien.

The first question we must resolve, however, is to what extent these ERISA

provisions are applicable in bankruptcy. To resolve the question, both parties

point to United States v. Reorganized CF&I Fabricators, Inc. (In re CF&I

Fabricators (I)), 518 U.S. 213 (1996), where the Court examined whether an

“exaction ought to be treated as a tax [in bankruptcy] ... without some ...

dispositive direction [from Congress].” Id. at 219. At issue was an exaction

under the IRC of 10% on the amount of the accumulated funding deficiency of

CF&I’s Plan for which the IRS asserted a tax priority claim.1

 Although the IRC
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defines the exaction as a “tax,” the Court stated, “characterizations in the Internal

Revenue Code are not dispositive in the bankruptcy context ....” Id. at 224.

To determine whether Congress intended the exactions be given tax

treatment in the bankruptcy context, the Court first looked for some “explicit

connector between” the IRC provision and the Bankruptcy Code. Finding no link,

the Court “looked behind the label placed on the exaction” and conducted a

“functional examination” of the provision in question to determine whether it was

“‘a pecuniary burden laid upon individuals or property for the purpose of

supporting the Government.’” Id. (quoting New Jersey v. Anderson, 203 U.S.

483, 492 (1906)). 

CF&I argues there is no “explicit connector” between § 412(n) and the

Bankruptcy Code; therefore, we must apply the “functional examination” to

determine if the exaction in this case qualifies as a tax. In pursuit of that

examination, it reasons because PBGC is a privately funded entity, the payment of

the minimum benefits contribution cannot possibly be “for the purpose of

supporting the Government.” Thus, CF&I concludes, those required payments do

not meet the definition of a tax. 

In response, the PBGC insists there is a connection between § 412(n) and

the Bankruptcy Code in this case because, unlike In re CF&I Fabricators (I), the

ERISA provision specifically “connects” to the Bankruptcy Code. PBGC points
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to that portion of § 412(n)(4)(C) which states, “[a]ny amount with respect to

which a lien is imposed ... shall be treated as taxes ... and rules similar to the

rules of subsections (c), (d), and (e) of section 4068 of [ERISA] shall apply ....” 

Moreover, § 4068(c) adds, “[i]n a case under Title 11 or in insolvency

proceedings, the lien imposed under subsection (a) of this section shall be treated

in the same manner as a tax due and owing to the United States for purposes of

Title 11 ....” 29 U.S.C. § 1368(c). 

Reading these provisions together, we can see at least a tangential

connection between § 412(n) and the Bankruptcy Code. The deciding question,

however, is whether they constitute an “explicit connection” withing the meaning

of In re CF&I Fabricators (I). We do not believe they do. 

As we read the Court’s analysis, the key to whether a statutory provision is

“explicit” in this context is whether the Bankruptcy Code adopts and makes

specific reference to the provisions of the other law. In re CF&I Fabricators

(I), 518 U.S. at 220. In this case, even though ERISA tangentially refers to “a

case under Title 11 or in insolvency proceedings,” the defect in the statutory

construct found in In re CF&I Fabricators (I) is still present. That is, Congress

made no specific reference in 11 U.S.C. § 507(7) to 29 U.S.C. § 412(n)(4). As a

consequence, the relationship established between ERISA and the Bankruptcy

Code is not explicit by definition. Thus, we conclude there is no expressed
2

See County Sanitation Dist. No. 2 v. Lorber Indus., Inc. (In re Lorber

Indus., Inc.), 675 F.2d 1062, 1066 (9th Cir. 1982).

3Although the cases do not involve ERISA contributions, we choose to

follow the paradigm because of its rationality.

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congressional intent that the “tax treatment” described in § 412 was meant to

apply in the bankruptcy context.

This conclusion takes us into the functional analysis initiated in In re

CF&I Fabricators (I). The quest begins with City of New York v. Feiring, 313

U.S. 283 (1941), in which the Court instructed tax priority in bankruptcy “extends

to those pecuniary burdens laid upon individuals or their property, regardless of

their consent, for the purpose of defraying the expenses of government or of

undertakings authorized by it.” Id. at 285 (emphasis added). As we have noted

recently in United Mine Workers 1992 Benefit Plan v. Rushton (In re

Sunnyside Coal Co.), No. 97-1276, 1998 WL 380966 (10th Cir. Colo. July 9,

1998), ___ F.3d ___ (10th Cir. 1998), this analysis was sharpened in LTV Steel

Co. v. Shalala (In re Chateaugay Corp.), 53 F.3d 478 (2d Cir. 1995), which

followed the lead of the Ninth Circuit2

 in setting forth four factors for

determining whether contributions required of a debtor are entitled to tax priority

in bankruptcy.3 If the contributions are:

1. An involuntary pecuniary burden, regardless of name, laid

upon the individuals or property;

2. Imposed by, or under authority of the legislature;
4The bankruptcy court and district court both determined PBGC’s minimum

contributions claim was not entitled to this tax priority because the lien of

§ 412(n) did not arise prior to CF&I’s bankruptcy petition. Section 412(n)(4)(B)

states the lien imposed “shall arise on the 60th day following the due date ....” 

Here, the due date for CF&I’s minimum contribution was less than 60 days before

the Debtors filed bankruptcy; hence, the automatic stay of bankruptcy would have

prevented the lien from arising. As Debtors insist, “the automatic stay prevented

any liens from affixing, being created, perfected, or enforced.” Our holding here

makes consideration of this point moot.

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3. For public purposes, including the purposes of defraying

expenses of government or undertakings authorized by it;

4. Under the police or taxing power of the state;

the contributions have the functionality of a tax and claims for those contributions

are entitled to tax priority. This analysis disposes quickly of PBGC’s basic

contention.

We believe the ERISA contribution fails the third element of the Chateaugay

test. PBGC admits the contributions are directed to and for the protection of

individual benefit plans. Thus, the object of the contributions is not to defray the

expenses of the government or any governmental undertaking, but rather, is to

finance a private obligation. Although mandated by statute, there is simply no

credible argument that the required payments fund either a function of the United

States or any of its undertakings. It thus follows PBGC’s claim for unpaid

minimum contributions is not to be accorded tax priority.4
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C. Administrative Priority

PBGC next argues if its minimum contributions claim does not qualify as a

priority tax claim, it is still entitled to a priority administrative claim because the

contributions were “actual, necessary costs and expenses of preserving the estate ...

for services rendered after the commencement of the case.” 11 U.S.C.

§ 503(b)(1)(A). PBGC argues we should be governed by the reasoning of Reading

Co. v. Brown, 391 U.S. 471 (1968). 

In Reading, a case under the former Bankruptcy Act, the Court granted

administrative priority to a claim for post-petition “damages resulting from the

negligence of the receiver.” Later cases have expanded this analysis. See, e.g.,

Cumberland Farms, Inc. v. Florida Dep’t of Envtl. Protection, 116 F.3d 16 (1st

Cir. 1997) (fine for violation of financial responsibility provision of environmental

laws); Alabama Surface Mining Comm’n v. N.P. Mining Co. (In re N.P. Mining

Co.), 963 F.2d 1449 (11th Cir. 1992) (civil penalties for violations of the Alabama

Surface Mining Act). At a minimum, these cases demonstrate a judicial willingness

to extend administrative claim status to tortious damages incurred post-petition and

statutory penalties in the environmental law arena incurred post-petition. For

PBGC’s argument to succeed, therefore, the minimum contributions would have to

be statutory and post-petition.
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In support of its position that the minimum contributions are a statutory

requirement, PBGC cites the provision requiring satisfaction of the minimum

funding standard. 29 U.S.C. § 1082(a)(1). PBGC then notes CF&I was obliged to

meet these statutory obligations until the Plan was terminated and maintains that

obligation continued even during bankruptcy, relying upon In re New Center

Hosp., 200 B.R. 592, 593 (E.D. Mich. 1996) (“Courts have held that statutory

obligations that bind the debtor will subsequently bind the bankruptcy trustee.”). 

PBGC argues this provision makes clear the minimum contributions claim in this

case arises out of a statutorily required post-petition obligation that could not be

abandoned.

CF&I responds this contention overlooks the fact the CF&I pension plan was

written, collectively bargained, relied upon, and was part of the consideration for

the work performed by its beneficiaries in the decades before its bankruptcy. 

Moreover, CF&I reminds, the Bankruptcy Code itself recognizes contributions to

pension plans are compensation for services and, thus, by definition are contractual

in nature. See, e.g., 11 U.S.C. § 507(a)(4) (granting a fourth priority to “allowed

unsecured claims for contributions to an employee benefit plan ... (a) arising from

services rendered within 180 days before the date of the filing of the petition ....” 

(emphasis added)).

Curiously, PBGC’s own Reply Brief boosts CF&I’s argument in stating:
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In this case CF&I and the USWA bargained for pension benefits that

the company later found it could not afford. These parties together

could have agreed, either before or after bankruptcy, to terminate the

Pension Plan (“Plan”) voluntarily before contributions went unpaid

and the funding gap widened.

It is evident the plan and the obligations arising from it were a matter of

contractual bargaining and agreement between an employer and its employees. The

fact a statute provides the means by which they may terminate their agreement does

not trump the contractual nature of the benefits plan. 

Even if we were to assume the contributions were statutory in nature, the

Reading line of cases only allows administrative priority for post-petition

expenses. See In re Sunarhauserman, Inc., 126 F.3d 811, 817 (6th Cir. 1997)

(“To be sure, the Reading rationale allows administrative expense priority in the

absence of a post-petition benefit to the estate. However, even in Reading and

cases following it, the debt at issue arose post-petition.”). Hence, the issue

devolves to whether the minimum contributions are pre- or post-petition debts.

CF&I argues the claims are “derived from pension credits under a pension

plan, all of which were earned by pre-petition consideration consisting of the labor

of the pension plan’s participants who did the work that earned these pensions.” 

This position rests on the principle that liabilities are not incurred post-petition

simply because they become due post-petition. See, e.g., Trustees of

Amalgamated Ins. Fund v. McFarlin’s, Inc., 789 F.2d 98, 101 (2d Cir. 1986);
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LTV Corp. v. PBGC (In re Chateaugay Corp.), 115 B.R. 760, 775 (Bankr.

S.D.N.Y. 1990) (vacated) (“The PBGC’s right to payment upon termination was, on

the petition date, a classic pre-petition contingent claim. The post-petition

termination of the pension plans did not transform the PBGC’s contingent prepetition claims into post-petition claims.”); LTV Corp. v. PBGC (In re

Chateaugay Corp.), 130 B.R. 690, 697 (S.D.N.Y. 1991) (“PBGC’s claims are prepetition contingent claims because labor giving rise to the pension obligations was

performed pre-petition.”); In re Sunarhauserman, Inc., 126 F.3d at 819. 

In contrast, PBGC points to the Coal Industry Retiree Health Benefit Act of

1992, 22 U.S.C. §§ 9701-9722, (Coal Act), and cases in which courts under its

provisions wrestled with bankruptcy priorities, most notable of which is LTV Co. v.

Shalala (In re Chateaugay Corp.), 154 B.R. 416 (S.D.N.Y. 1993), aff’d, 53 F.3d

478 (2d Cir. 1995). 

[T]here is no doubt that the charges incurred by LTV Steel not only are

a result of its association with previous collective bargaining

agreements, but also are a direct consequence of its continued

corporate existence; the Coal Act only imposes obligations on

signatories which are still “in business.” Thus, the charges stem from

LTV Steel’s continued operation in Chapter 11, and as such are costs

of doing business best classified as “administrative expenses” within

the Bankruptcy Code scheme.

Id. at 422 (footnote omitted). 

We do not find the Coal Act cases helpful here. The nature of the Coal Act

claims was fundamentally different from the claim presented in this case because
5However, to the extent PBGC’s claims are based on the labor of the

workers during the post-petition period until termination, they have a postpetition administrative claim. In fact, the bankruptcy court has already allowed

that claim.

6A major portion of the Appeals Fund will accrue to interests represented

by USWA if the judgment of the district court is affirmed.

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the Coal Act claims are entitled to priority as a tax. In re Sunnyside Coal Co., No.

97-1276, 1998 WL 380966, at *4. Inasmuch as the contributions in this case are

not taxes, we can draw no parallels from the Coal Act cases that would apply here.5

Pointedly, asserting a separate interest from that of the Debtors, Appellee

United Steel Workers of America (USWA)6

 suggests when Congress wanted to give

administrative priority to claims, it did so by amending the Bankruptcy Code. In

particular, USWA cites 11 U.S.C. § 1114, in which Congress provided that payment

of retiree medical benefits due during bankruptcy “has the status of an allowed

administrative expense.” In contrast, Congress has not amended the Bankruptcy

Code to provide administrative status for the PBGC’s minimum funding

contribution claim. We hold that claim is not entitled to administrative priority in

this case.

D. Valuation of the Unfunded Benefits Claim

We turn now to the problem of valuing the claim for liabilities that accrued

for plan benefits when PBGC terminated the plan. Inasmuch as those liabilities are
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for beneficiaries’ payments that extend into the future, the amount of the liability

must be reduced to present value so the debt can be dealt with under the

reorganization plan. While the parties agree to the necessity for such a valuation,

they disagree over the methodology to be employed. The dispute is significant

because the proffered methods produce marked differences of $222,866,000 if

PBGC’s approach is utilized or $124,441,000 if CF&I prevails. The district court

chose the latter, and PBGC claims the choice was erroneous. 

To insure the relative equality of payment between claims that mature in the

future and claims that can be paid on the date of bankruptcy, the Bankruptcy Code

mandates that all claims for future payment must be reduced to present value. 11

U.S.C. § 502(b) (“[T]he court ... shall determine the amount of such claim in lawful

currency of the United States as of the date of the filing of the petition ....”). 

Accepting the need to discount the amount of the claim, the parties disagree only

over the approach to valuation because of two ERISA provisions. 

The first, 29 U.S.C. § 1362(b)(1)(A), provides:

[L]iability to [PBGC] shall be the total amount of the unfunded benefit

liabilities (as of the termination date) to all participants and

beneficiaries under the plan ....

The second, 29 U.S.C. § 1301(a)(18), defines the “amount of unfunded benefit

liabilities” as:

the excess (if any) of --
7Because the liabilities of a terminating benefit plan are usually satisfied by

the plan’s purchase of annuities from private insurance companies, PBGC’s

methodology “produces a value of benefit liabilities in line with prices of

insurance company annuity contracts issued to cover such benefits.” The PBGC

adjusts the rates quarterly using data from insurance company annuity price

quotes.

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(A) the value of the benefit liabilities under the plan

(determined as of such date on the basis of assumptions

prescribed by [PBGC] for purposes of section 1344 of this

title), over

(B) the current value (as of such date) of the assets of the

plan.

PBGC maintains this combination of statutes represents an express

delegation of rule-making power to PBGC to determine the present value of its

claims for terminated plans. PBGC argues, “Congress mandated that the

assumptions used to determine the present value of benefit liabilities under

terminated pension plans be the same assumptions used for purposes of valuing a

plan’s benefits under 29 U.S.C. § 1344.”7

PBGC relies upon Batterton v. Francis, 432 U.S. 416 (1977), and Chevron

v. NRDC, 467 U.S. 837 (1984), to remind us when Congress delegates rule-making

power, the rule enacted has the force of law. In addition, it maintains the district

court should have applied ERISA as an “external law” to determine the validity and

amount of the claim in bankruptcy. See Landsing Diversified Properties -- II v.

First Nat’l Bank & Trust Co. (In re Western Real Estate Fund, Inc.), 922 F.2d

592, 595-97 (10th Cir. 1990). 
-20-

Although valid in other contexts, we do not believe these principles are

applicable here. First, as noted by CF&I, 29 U.S.C. § 1301(a)(18) defines the

amount of unfunded benefit liabilities “for purposes of this title [ERISA]” only. 

Therefore, its terms cannot extend to bankruptcy. 

Second, 29 U.S.C. § 1301(a)(18) conflicts with provisions of the Bankruptcy

Code, and, as the district court held, this conflict must be controlled by the

Bankruptcy Code. Indeed, the very action in which the claim arises is, after all,

bankruptcy. Congress has provided very precise contours of how claims that are

administered in Chapter 11 are to be decided, and has pronounced as a cardinal rule

that all claims within the same class must be treated alike. 11 U.S.C. § 1123 (a)(4). 

That principle would be violated here if PBGC’s interpretation of § 1301(a)(18)

were adopted because PBGC’s discount rate would apply only to it and not any

other general unsecured creditor. Congress has made clear when ERISA conflicts

with another provision of federal law, ERISA must be subordinated. 29 U.S.C.

§ 1144(d). 

Nothing in the ERISA sections relied upon by PBGC implies a carry-over

into the realm of bankruptcy to allow PBGC to set its own valuation methodology. 

Even though that methodology was adopted in the exercise of PBGC’s

administrative authority, we have no doubt of its inapplicability in the world of

bankruptcy. The district court did not err in requiring the bankruptcy court to
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employ the prudent-investor discount to reach the present value of PBGC’s

unfunded benefits liability claim.

The judgment of the district court is AFFIRMED.