Al tho ug h th is a pp e a l w a s argue d b e fo re the B a nk ru ptc y Ap pe llate Pane l of

the Sixth C ir c uit 1 on May 2, 2007, in J anuar y 2008 the Panel wa s rec onstitut ed to include Judge Aug . At that time, the par ties were g iven the opportunity to rea rg ue the case or otherw ise supplement the re cord. The parties de clined to do so.

EL ECTRONI C CI TATI ON: 2008 FE D App. 0018P (6th Cir.)

File Na me: 08b0018p.06
BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT
I n r e : HN RC D I SSO L UT I ON CO

. f/ k/a HORI Z ON NAT URALRESOURCES COMPANY, et al.,
De bto rs
.

______________________________________ UNI T E D M I

NE WORKERS OF AMERI CA 1974 PL AN AND TRUST, et al.,

Ap pe lla nts ,

v. L EXI NGTONCOALCOMPANY, L L C, Appellee

.

______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. 06-8067

Appea l from the United States B ankruptc y Court for the E astern D istrict of Kentuc ky at Ashland. No. 02-14261. Argued: May

2, 2007 1
Dec ided and F iled: November 4, 2008
B e fo re : A UG , G REG G, and PAR SON S, B ank

ru ptc y Ap pe llate Pa

ne l Judg e s.- 2- ____________________ CO UN SEL
ARG UED: J ohn C. Good ch i l d, I I I , MORGAN, L EWI S & B OCKIUS, L L P, Phi ladelphia, Pe nn sylva

nia , f or Ap pe lla nts . G re g or

y R. Sc ha a f, GR EENE B AU M DO L L & Mc DO NA L D PL L C, L e xin g to n , K e n tu c ky , f

o r A p p ellee. O N B RI E F: JohnC. G oo dc hil d, I I I , M OR GA N, L EWI S & BO CKI US, L L P, Phi ladelphia, Pennsylvania, MarkMurphy , Richard C. Welch, MOONE Y, GREEN, B AKER & SAMDON, P .C., Washington, D.C., J erome J

. Metz, J r., PORTER W RI GHT MO RRI S & AR TH UR

L L P, Ci nc inn a ti, Oh io, fo r A pp e lla nts

. Gr e g or

y R. Sc ha a f, JohnF . B ill ing s, G R E E N E B A U M D O L L& M c D O N A L D P L L C , L e xi n g t o n , K e n tu c ky , C

. R

. B o w l e s , B e n j a m i nJ. Evans, Raja J. Patil , GREENEB AUM DOL L & M cDONAL D PL L C, L ouisvill e, Ke ntucky , for Appellee

.

____________________ OP IN ION

____________________ J AMES D. GREGG, B ankruptc y App el l at e Panel J udg e. Hor izon Natural Resource s Com pa ny and se ve ral of it s su

bs idi ari e s a

nd a ff ili a te s ( c oll e c tiv e ly , th e “ De bto rs ” ) p art ic ipate d in

a mul tie mpl oy e r pe ns ion

pla n, the Un ite d M ine Wor

ke rs of Am e ri c a 19 74 Pe ns ion

Pla n a nd Tr us t (“ 19 7 4 P l an ” ) , u n t i l t h e D e b t o r s t e r m i n a t e d o p e r a t i o n s a

p p r o xi m a t e l y

t w o y e ar s a f

t e r f i l i n g t h e ir chapte r 11 ca ses. Ter

mination of the Debtors’ operations constituted a complete withdrawa l from the 1974 Plan and ca

used the De btors to incur withdraw al liability under ERI SA. The 1974 Plan appea ls the bankruptcy

court’s or der de nying its appli cation for allowanc e of a

$36,248,771 administrative expense cla im. The 1974 Plan asserts that this amount repr esents the por tion of the Debtors’ total withdrawa l liabilit y that relates to the Debtors’ postpetition operations. For the

rea sons that follow, the bankruptc y court’s or der is AF FI RMED.

I. ISSU ES ON AP P EAL
The ove rar ching issue in this appeal appe ars to be de cept i v el y s i m p le: did the bankruptc y court ab u s e it s d is c r e ti o nw h e nit d e te r mi n e d th a t t h e p o s tp e ti ti o np o rti o no f th e 1 9 7 4 Pl an’s withdrawa l liabilit y

claim was not entitled to a dminist rative expense priority ? Howeve r, the a nswer to thi s b r o a d qu e s ti o n r e qu ir e s c o n s id e r a ti o n o f tw o c o mp le x an d d if f ic u lt s u b

- is s u e s : ( 1 ) did the bankruptc y

court e rr whe n it concluded that t h e 1 9 7 4 Plan failed to establish that the withdra wal- 3-

lia bil ity , o r a

po rt ion the re of , r e pr e se nte d a

“ dir e c t and

su bstanti a l be ne fi t” to t he De bto rs ’ ban k ru p t cy es tate under

the “be nefit to the estate ” test established by the United States Court of Ap pe a ls f

or t he S ixth Ci rc uit

inPe ns ion Be ne

fit Gu ar . Co rp . v . S

un ar ha us e rm an , I

nc . ( In re Sunarhauserman, Inc .) , 126 F.3d 811, 816 (6th Cir. 1997); and (2) did the bankruptc y court e rr whe n it applied the “be nefit to the estate ” test, bec ause the except i o n set forth by the United States Supreme Court in Re ad

ing Co. v . B ro wn , 391 U.S. 471, 88 S. C t. 1 7 5 9 (1 9 6 8 ), m ay apply to the wi thd ra wa l li a bil ity c la im?

II. JU RI SDI CT ION AND STANDARD OF RE VI EW
Th e B ank ru ptc y Ap pe llate Pane l of

the Sixth Cir c uit ha s jur isd ic tio n to de c ide thi s a pp e a l. The United States District Court for the Easter

n District of Ke ntucky

has authorized appeals t o the Pane l, a nd a fi na l or de r o f t

he ba nkrup tcy cou rt may

be a pp e a le d b y

ri g ht u nd e r 2 8 U .S. C. § 158(a) (1). F or the purpose of an a ppeal, an order is f

inal if it “ends the litigation on the merits and leave s n o t h i n g fo r the c ourt to do but ex ecute the judg ment.” Midland Asphalt Cor p. v. United States , 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989). The bankruptc y court’s or der de nying the 1974 Plan’s application for an administrative expense claim is a final orde r. Volvo Commerc ial Fin. LLC the Ame ricas v. Gase l Transp. Lines, Inc. ( In re Gasel Transp. L ines, Inc.) , 326 B.R. 683, 685 (B .A .P. 6th

Cir . 2 00 5) (“ An

or de r d e te rm ini ngthat a c la im is no t e nti tle d to a dmi nis tr a tiv e e xpe ns e priority constitutes a final orde r.”)

. This Panel revie ws the bankr uptcy court’s de nial of administrat ive expense priority status for a n abuse of

discretion. See B enek

e Co. v. Eco n
. Lodging Sys., Inc. ( In re Ec on. Lodging Sys., Inc.) , 234 B.R. 691, 693 (B .A.P. 6th Ci r. 1999). The bankruptc y court’s ruling on the 1974 Plan’s motion for reconsider ation is also revie wed under t he abuse of discre tion standard. See E glinton v. Lo y e r ( I n r e G

. A

. D

. , Inc.) , 34 0 F.3 d 331 , 3 34 (6 th C ir . 2 00 3) (d e nia l of a Rul e 60 (b ) m oti on

is

re vie we d f

or a bu se of dis c re tio n) ; Heath v. A m. Expre ss Trave l R elated Servs. Co. ( In re He ath) , 331 B.R. 424, 429 (B .A.P. 9th Ci r. 2005) ( denial of a motion to rec onsider allowanc e or disallowa nce of a c la im und e r R

ule 30 08 is re vie we d fo r a

bu se of dis c re tio n) . “ An

a bu se of dis c re tio n o c c ur s o nly when the tr ial court re lies upon clea rly err oneous findings of fact or when it improperly applies the law or use s an er

roneous leg al standar d.” S ch mi dt v. B o g g s (In r e B o g

g s ), 24 6 B. R. 265 , 2 67 (B .A .P.- 4-

6th Cir. 2000). “The question is not how the revie wing court would have rule d, but rather whether

a re a so na ble pe rs on c ou ld ag re e wi th the ba nk ru ptc y c ourt ’s de c isi on ; if

re a so na ble pe rs on s c ou ld differ as to the issue, then there is no a buse of discr etion.” Mayor of Baltimore, Md. v. W . Va. ( In re Eagle-Picher I

ndus., Inc.) , 2 85 F .3 d 5 22 , 52 9 (6t h Cir. 20 02 ); Le bo v itz v . H age me y e r ( In re Le bo v itz ) , 360 B.R. 612, 615 (B .A.P. 6th Ci r. 2007).

III . F AC TS
The De btors wer e par

ties to c ollective barg aining ag ree ments with the United Mine Workers of Am e ri c a (“ UM WA” ). Th e se a g re e me nts , kn ow n a s Natio na l B itumin ou s Coa l Wa g e Ag re e me nts (“N BCWA s ”) , go v ern edt h e t erm s an d co n d i t i o n s o f e mp l o y

m en to f t h e U M W A- re p re s en t edm i n ers by establishing a

pplicable wa g es and be nefits t o be paid to the miners by the Debtor s. Among the benef its established under the N BCWAs was the require ment that the Debtor s participate in the 1974 Pl an . The 1974 Plan is an irre vocable trust established pursuant to § 302(c )(5) of the L aborManag ement Relations Act, see 29 U. S.C. § 1 86 (c )( 5) , a nd is a lso a mul tie mpl oy e r d e fi ne d b e ne fi t pension plan under

§ 3(37)( A) of E RI SA, s ee 29 U.S.C. § 1002(37)(A) . Mi n er s employ ed by the Debtors acc rued pension and death benef its in the 1974 Plan for eve ry hour they worke d under the NB CWAs

. ERI SA require s pension plans, such as the 1974 Plan, to maintain assets sufficient to mee t future pe nsion liabili ties. See 29 U.S.C. § 1052. To meet thi s require ment, participating e mploy ers
are subject to two distinct ty pes of liability – periodic contributions a nd withdrawa l liabilit y . The periodic c ontribution rates ar e esta blished throug h collective bar gai n i n g and ar e set for th in the NB CW As. Under

the NB CW As, the contributions r equire d by the 1974 Plan w ere based upon the hours worke d by

eac h UMWA miner. Wit hdraw al liabi lity , by contra st, is im posed by

fede ral statute, s ee 29 U. S.C. § 1 38 1, and re pr e se nts an emp loye r’ s obli g a tio n upo n its with dr awa l fr om a multiemploy er pe nsion pl an to pay its proportionate shar e of the plan’s total unfunde d vestedSe c tio n 1 38 1 s tate s a s f oll ow s: 2 (a) I f an e mploy er w ithdraws from a multiemploy er pla n in a complete w ithdrawa l or a pa rtial withdrawa l, then the employ er is li ab l e t o t h e plan in the amount d e t e r m i n e d u n d e r t h i s p artt o b e t h e w i t h dr aw a l l i a b i l i t y. (b) F or purpose s of subsection (a ) of this section– (1) The withdrawa l lia bility of an e mploy er to a

plan is the amount deter mined under se ction 1391 of this titl e to be the a llocable amount of unfunded ve sted bene fits, adjusted– (A) f irst, by any de minimi s reduc tion applicable unde r sec tion 1389 of this titl e, (B ) n e xt, in

the c a se of

a pa rt ia l w ith dr awa l, i n a c c or da nc e wi th section 1386 of this title, (C) then, t o t he extent nece ssary to refle ct the limitation of annual pay ments under se ction 1399(c) (1)( B) of this titl e, and (D) f inally , in acc ordanc e with sec tion 1405 of this ti tle. (2) The term “c omplete withdraw al” mea ns a complete withdrawa l describe d in section 1383 of this titl e. (3 ) T he te rm

“ pa rt ia l w ith dr awa l” me ans a pa rtia l w ith dr awa l de sc ri be d in section 1385 of this title. 29 U.S.C. § 1381. Be cause the Debtor s filed their ba nkruptcy petitions prior to October 17, 2005, this appeal 3 is gove rned by

the B ankruptc y

Code without reg ard to t h e amendments made by the B ankruptc y Abuse Preve ntion and Consumer Protection Act of 2005. All statutory

ref ere nces are to the Ba nkruptcy Code, 11 U.S.C. §§ 101 to 1330 (2004), unless otherwise note d.

- 5- be ne fi ts. Un fu

nd e d v e ste d b e ne fi ts ( so me tim e s r e fe rr e d to a s “ UV B s” ) a re de fi ne d und e r t

he statut e 2

as t he diffe renc e betwe en the pr esent va lue of ve sted bene fits and the cur rent va lue of the pla

n’s assets. See 29 U.S.C. § 1391.
On Novembe r 13 and 14, 2002, the Debtors filed vol untary petitions for relief

under c hapter 1 1 o f the B ankruptc y

Code. The De btors operated their businesses a s debtors-in-posse ssion for

3 almost two y ea rs af

t er t h eir c ases we re c ommenced. D uring that time, they employ ed over

1,000 UMWA-repr esente d employ ees. The Debtors e s t i m at e that their employ ees w orked a combined total of 2,976,962 hours duringthe postpetition period.The De btors sold their g oing- conce rn oper ations for more than $481 mill i o n in secure d 4 claims and $304 million in cash.
I n Augus t 20 04 , th e ba

nk ru ptc y c ourt g ra nte d th e De bto rs ’ m oti on

re qu e sti nga

uth or ity to 5 reje ct all of their c ollective bar g aining ag ree ments. Pursuant to the bankruptcy court’s or der, the Debtors r ejec ted the NB CW As on or around September 30, 2004. The reje ction coincided w ith the c los ingof the sa le of

the De bto rs ’ a sse ts.

- 6- Whil e oper ating postpetition, t he De btors paid all nec essar y wage s an d m ade all require d contributions for bene fits due to employ ees unde r t h e NB W C As . I n fac t, during the terms of the 1998 and 2002 NB CW As, participating e mploy ers, includingthe Debtor s, were not require d to make any contributions to the 1974 Plan. Be cause the 1974 Plan was fully funded at that time, pursuant to a provision in the 1998 NB CW A, re quisite employ er c ontributions were z ero cents per hour. Howeve r, in the plan y ear ending J une 30, 2001, an actua rial funding defic it a

rose betwee n the future value of vested be nefits and the 1974 Plan assets. Acc ording to the 1974 Plan, the defic it resulted from a number of fac tors, including a dip in the stock marke t, la ck of incoming c ontributions, and chang es in pensions. As a result, the 1974 Plan beg an to re port unfunded ve sted bene fits during the plan y ear ending J une 30, 2001.
After unsucce ssfully

attempting to r eor gan i z e duringthe postpetition period, the Debtor s deter mined to sell substantially all of their a ssets. On J uly 11, 2004, the Debtor s filed their Third Amended Joint P lan of Reorg anization and Third Amended J oint Plan of L iquidation (the “Chapter 11 Plans ” ). As c on te mpl a te d by the Cha pte r 11 Plans , a

c ourt -a pp ro ve d a uc tio n s a le of

the De bto rs ’ assets wa s held on Aug ust 17, 2004. L exington Coal Company , L L C (“L exington C o al ”), the Appellee in the prese nt a

ppeal, was among the succe ssful purcha sers. On September 16, 2004, the bankruptc y

court e ntere d order s confirmingthe Chapter 11 Plans. On Septe m ber 30, 2004, the De bto rs c on summate d th e sa le of the ir a sse ts t o the a

pp ro ve d pur c ha se rs , in c lud ingL e xing ton Coa l; 4 the Cha pte r 1 1 Pl ans be c a me e ff

e c tiv e ; and the De bto rs re

je c te d th e NB CWAs

. I n a c c or da nc e wi th 5 the cour t’s order s confirmingthe Chapter 11 Plans, the D ebtors we re the n deeme d dissolved.
The 1974 Plan asse rts, and L exington Coal does not di s p u te, that the De btors terminated

cover ed oper ations on September 27, 2004. Ac cording to the 1974 Plan, this cessation of operationsUnder 29 U.S.C. § 1391, the “cha rg e-de termination” se ct i on of ERI SA, the withdrawa l 6 lia bil ity c a lc ulatio n is to be ma de , “n ot as of the da y of wi thd ra wa l, b ut as of the last day of the plan year preceding the year during w hich the em ployer withdrew . . . .” Mi lwa uk e e Br e we ry

W or k e rs’ Pension Plan v. J

os. Schlitz Brewing Co. , 513 U.S. 414, 417-18, 115 S. Ct. 981, 986 (1995) ( citing 29 U. S.C. §§ 13 91 (b )( 2) (A )( ii) , (b)( 2) (E )( i) , ( c )( 2) (C )( i) , ( c )( 3) (A ) a nd (c )( 4) (A ) ( e mph a sis in orig inal)).

- 7- constituted a complete withdrawa l from the 1974 Plan duringthe Plan y ear ending J une 30, 2004. 6 Be cause the 1974 Plan had unfunde d vested be nefits at that time, the De btors’ withdraw al from the 1974 Plan ga

ve rise to withdra

wal liability

under ERI SA.
On Dec ember

27, 2004, the 1974 Plan filed an a dmini s t rative e x pense c laim for the postpetition portion of the Debtors’ withdra wal liability . The 1974 Plan’s d et er mination of the amount of the De btors’ postpetition withdrawal liability require d a three -step calc ulation. First, the 1974 Plan calculated the total amount of the Plan’s unf unded veste d ben ef

i t s at the time of the Debtors’ withdrawa l. Next, the 1974 Plan de termined what portion of the Plan’s tota l u n fu n d ed vested be nefits was attributable to the Debtors. To a ccomplish this the 1974 Plan utiliz ed a modifie d version of the “Rolling-5” method set forth in t he withdrawal l iability statute. The 1974 Plan divided the hours wor

ked by the Debtor s’ employ ees dur ing the five y ear s prec eding withdrawa l by the total hours worke d by

all employ ees dur ing that same per iod. The re sulting per centa g e wa s then multipl ied b y t h e 1974 Plan’s total unfunded ve sted bene fits to determine the D ebtors’ total wi thd ra wa l li a bil ity

. I n ac c or da

nc e wi th thi s ca lc ulatio n, the 19 74 Plan ass e rt e d that th e De bto rs ’ total withdrawa l liabilit y

as of June 30, 2004, was $224,986,733.
The 1974 Plan then de termined what por tion of the Debtors’ total w ithdrawa l liability was attributable to w ork perf

ormed by the Debtor s’ employ ees postpetition. The 1974 Plan ca lculated this amount by

dividing the hour s worked by the Debtor s’ employ ees postpetition by the total hours

wo rk e d b y

the De bto rs ’ e mpl oy e e s d ur ingthe fi ve y e ars imm e diate ly pr e c e din g wi thd

ra wa l. T his calc ulation resulted in appr ox imately 8.7% of the total withdra wal liability

being al l o ca t ed t o the postpetition period. Accor dingly , the 1974 Plan alleg ed that 8

. 7 % o f th e D ebtors’ $224,986,733 total wi thd ra wa l li a bil ity , o r $ 19 ,5 80 ,1 46 , w a s e nti tle d to tr e a tme nt a s an a dmi nis tr a tiv e e xpe ns e c la im.Pursuant to the bankruptc y court’s order s confirming the Chapter 11 Plans, L exington Coal 7 ha s st and ingto o bje c t to a dmi nis tr a tiv e e xpe ns e c la ims

. Ba sed on the revised interest rate utiliz ed by the 1974 Plan, the 1974 Plan’s total unfunded 8 ve ste d b e ne fi ts at th e e nd of the 20 04 Pla

n y e ar we re a

pp ro xima te ly $1 .8 bil lio n. Ha d th e int e re st rate assumption not been cha ng ed, the 1974 Plan’s total unfunde d vested be nefits at the end of the 2004 Plan Year

would hav e b ee n approximately $2.1 billion, and the Debtors’ total withdra wal liability claim would have been a pproxi mately

$163 milli on. After the 1974 Plan fi led its Amended Claim, the bankr uptcy court re quested fur

ther 9 information from the 1974 Plan, including: a statement of the amount of t he withdrawal liability as of June 30, 2002, and as of J une 30, 2004; a st atement of the amount of the withdra wal liability

that would have be en asse ssed ag ainst the Debtors if withdrawa l ha d occur red on the date the c hapter 11 petitions w er e fi l ed ; and an e x planation of the inter est rate used in ca lculating the withdraw al liability ref

lected in the 1974 Plan’s orig inal claim. On September 14, 2005, the 1974 Plan provided the inf or ma tio n r e qu e ste d b y

the c ourt

.

- 8- On Mar ch 1 7 , 2005, L exington Coal filed an objec tion to the 1974 Pl an’s a dminist rative expense claim. L exington Coal asserte d that th e 1 9 74 Plan’s claim did not qualify as an 7 administrative expense because the withdrawa l liabilit y did not directly

and substantially

benef it the Debtors’ estate. F ollowing a status conf

er ence on May

19, 2005, the bankr

uptcy court issued a scheduling order stating that it would “dea l f irst w ith leg al issues that may avoid t h e n ee d for discovery .” (J.A. at tab 7.) Acc ording ly , the cour t instructed the par

ties to brief the le g al issues set forth in the objec tion.
After leg al memora

nda we re f

iled by the 1974 Plan an d L ex i ng ton Coal, the 1974 Plan responde d by

filing a n amende d administrative expense claim seeking $36,248,771 as postpetition

w ithdrawa l liabilit y

(“A mended Claim”). T he Amende d Claim li sted the total amount of withdra wal liability attribu table to the De btors as $138,354,090, a de c re as e from the or igina l calculation of $ 2 2 4 , 9 8 6 , 7 3 3

. At t ac h m en t s t o t h e A m en d edC l ai m s t at ed t h at t h i s d ec re as e d er i v edfr o m a c h an ge in t he int e re st rate a ssumpt ion the 19 74 Plan a

pp lie d to c a lc ulate its un fu nd e d v e ste d b e ne fi ts. 8 Howeve r, the amount the 1974 Plan sought as a n administrative expense inc reased from $1 9, 58 0, 14 6 to $3 6, 24 8, 77 1. Th e 19 74 Plan e xpla ine d th at th e or ig ina l c la im util ize d a n in a c c ur a te withdrawa l date, which c aused the hours worke d during a full y ear of the postpetition period to be excluded from the c alculation. Corre ction of this e rror resulted in 26.2% , rathe r than 8.7%, of the Debtors’ total withdrawa l liabilit y being allocate d to the postpetition period. 9The ba nkruptcy court disallowed the withdrawa l liabilit y claim under

11 U.S.C. § 503(b). 10 Th e re fo re , it de c lin e d to a dd re ss L e xing ton

Coa l’ s a sse rt ion

that th e c la im r e su lte d f

ro m th e De bto rs ’ reje ction o f t h e c o l l ec t i v e b ar gai n i n g agr ee m en t s an d co n s t i tu t ed

a p re p et i t i o nu n s ec u re d

cl ai m under 11 U. S.C. § 365 (g ) or § 502 (g ). We al so se e no re a so n to a dd re ss § 36 5( g ) o r § 50 2( g ) i n th is a pp e a l.

- 9- On Novembe r 7, 2005, the ba nkruptcy court issued a

Memorandum Op i n i on denying administrative expense priority for the Amended Claim. The court beg an it s analy sis by noting that the De bto rs ’ w ith dr awa l li a bil ity did no t ar ise un til the De bto rs c e a se d b us ine ss o pe ra tio ns , a lmo st tw o y e ars a ft e r t

he fi lin g of

the ir c ha pte r 1 1 c a se s. Ho we ve r, the c ourt e xpla ine d th a t th e lia

bil ity was not automatica lly

considere d an administrative e x pense “ simply beca use [ it] acc rued a fter the filing of the bankr uptcy proce eding .” (J.A. at t ab 14, p. 7.) The De btors wer e still required to show that the withdraw al liability provided a

direc t and subst an t i al b enef it to the estate. Althoug h the bankruptc y

court acknow ledg ed the possibili ty of pro-r ating the withdraw al liability for pur poses of

c la ssi fy inga po rt ion of the lia bil ity a s an a dmi nis tr a tiv e e xpe nse, it c on sid e re d th e us e of pa st contribution experience in making suc h a ca lculation problematic. The cour t observed that the liabil i t y h a d “ a c c u m u l a t e d

o v e r m an y y e ar s ” an d

t h a tt h e a m o u n to f

t h e l i a b i l i t y w a s “ c l e a rl y depende nt, among other thing s, upon the succe ss of the [1974 Pl an’s] investments as administered by the tr us te e s o f t he fu nd , a nd c on tr ibutio ns by

oth e r em plo y e rs .” (J.A . at ta

b 14, p. 6. ) To ill us tr a te this point , the cour

t note d t h at t h e De b tors’ total withdrawa l liabilit y as of the c hapter

11 petition date, Nove mber 13, 2002, would have bee n approximately $145,307,051. On the date of the De bto rs ’ a c tua l w ith dr awa l f ro m th e 19 74 Plan, Se pte mbe r 2 7, 20 04 , the ir tot a l w ith dr awa l li a

bil ity

wa s $ 13 8, 35 4, 09 0. Th e re fo re , the De bto rs ’ tot a l with dr awa l liab ili ty de c re a se d b y

a pp ro xima te ly $7 milli on during the pendenc y of the Debtors’ chapte r 11 case
. The court further sug g ested that the De b t o rs ’ m et h o d o f ca l cu l at i o n wo u l d re s u l t i n“m o re an d m o re o f t h e w i t h dra wa l l i ab i l i t y [ b ei n g]

conver ted .

. . to a

n administrative claim” simply by the passag e of time, “ without any demonstration of bene fit to the estate.” (J.A. at tab 14, p. 9.) Be cause no additional indebtedness wa s cre ated during the admini stration of the De btors’ estate , the cour t concluded that the 1974 Plan had fa iled to demonstrate that the w ithdrawa l liabilit y upon which the Amended Claim wa s based dire ctly and substantially

benef itted the Debtors’ estate. 10
On No ve mbe r 1 7, 20 05 , the 19 74 Plan fi le d its Mo tio n fo r R e c on sid e ratio n p ur su ant t o Ru le 30 08 , o r i n th e Al te rn a tiv e , to Alte r or Am e nd Judg me nt, or fo r Re lie f fr om Judg me nt pur su ant t o R u l es 7 0 52, 9023 and 9024 (“ Motion to R econside r”) . The ba nkruptcy court he ld a hea

ring- 10-

reg ardingthe Motion to Reconsider on January 19, 2006. At the hea

ring , o v er t he objec tion of L exington Coal, the bankruptc y court allowed the 1974 Plan to prese nt e vidence as to f actua l matters

conce rning the ca lculation of the Ame nded Claim. This evidence included testimony from the 1974 Plan’s comptroller a

n d an actua

rial consultant, both of whom e x plained that the de cre ase in the De bto rs ’ tot a l wi thd

ra wa l lia bil ity duri ng the pe nd e nc y of the ir c ha pte r 11 c a se s re su lte d p ri mari ly from a c hang e in ac tuarial a ssumptions . Specifica lly , the wit nesses testified that in November 2004, the 1974 Plan c hang ed the interest rate assumption it applied to c alculate the 1974 Plan’s unfunded vested be nefits. This new inter est rate applied to a ll withdrawals occ urringafte r June 30, 2004, and the e ff e c t of the re vis e d a ssumpt ion

wa s to low e r t

he 19 74 Plan’ s to ta l un fu nd e d v e ste d b e ne fi ts. Under the new inter est rate , the Debtor s’ total withdrawa l liabilit y as of the w ithdrawa l date, J une 30, 2004, wa s approxima te ly $ 1 3 8 mi llion. However , acc ording to the 1974 Plan’s comptroller, the Debtor s’ total withdrawa l liabilit y would have be en appr ox imately $163 m i llion had the prior interest rate assumption r emained in e ffe ct. I f the De btors had withdra wn from the 1974 Plan a s of the petition date, their total withdra wal liability

would have be en appr ox imately $145 milli on. Con se qu e ntl y , b ut f

or the c ha ng e in i nte re st r a te a ssumpt ion , th e De bto rs ’ t ota l w ith dr awa l li a bil ity would have increa sed (from $145 milli on to $163 mill ion) during the pende ncy of their c hapter

11

c a se s. B e c a

us e the de c re a se in t

he De bto rs ’ t ota l w ith dr awa l li a bilit y re su lte d f

ro m th e c ha

ng e in int e re st r a te a ssumpt ion , th e 19 74 Plan a sse rt e d that the de c re a se wa s no t ind ic a tiv e of the be ne fi t (or lac k there of) pr ovided to the Debtor s’ bankr uptcy estate.
At the hea ring on the Motion to Reconsider, the 1974 Plan also a rg ued that, to the extent the bankruptc y

court he ld t h at t h e wi t h draw al liability claim could have some potential bene fit to the

e state , th e 19 74 Plan s ho uld be pe rm itt e d to pr e se nt a dd iti on a l e vid e nc e in s up po rt of its quantification of that benef it. I n this respec t, the 1974 Plan stated that the Rolling-5 me thod was not the only way to calculate the portion of t h e De b t ors’ total withdraw al liability that should be allocate d to the postpetit i o n p er i o d

. As an a lternative to the Rolling- 5 method, the 1974 Plan

su g g e ste d th a t th e a llo c a tio n c ou ld b e ma de by e va luatin g ho w m

uc h p e ns ion cre dit

the De bto rs ’ employ ees e arne d during the two y ear s the Debtors ope rate d postpetition.
On Marc h 6, 2006, the bankr uptcy court issued a second Memorandum Opinion addre ssing the Motion to Reconsider. In its opini on, the cour t ag ain emphasiz ed the many fac tors that contributed to the De btors’ withdraw al liability . These f actor s included the a ctuar ial assumptions- 11-

relied upon in calc ulating the amount of t he li ability

. Howeve r, t he court conclude d that the 1974 Plan had fa iled, once a g ain, to s h o w t h at t he withdra wal liability

arose beca

use of a direc t and substantial benef

it to the estate. According ly , the bankruptcy court denied the Motion to Reconsider. This timely

appea l followed.

IV . D ISC USS ION The 1974 Plan appe als the bankr uptcy court’s de nial of its administ rative e x pense c laim on

sever al g rounds. Fir st, the 1974 Plan argues t hat, under established ca se law, the bankruptc y court

wa s r e qu ir e d to a llo c a te the wi thd ra wa l liab ili ty c la im be tw e e n pre pe tit ion and po stp e tit ion pe ri od s. Be cause the Debtor s’ employ ees c ontinued to work for the Debtors during the pende ncy of the chapte r 11 ca ses and a ccr ued pension c redits during that time, the 1974 Pla n asser ts that the postpetition portion of the withdrawal liab i l i t y claim is entitled to priority as an a dminist rative expense under the Six t h C i rc u i t ’s “benefit to the estate” test. See P ension Bene fit Guar. Cor

p. v. Sunarhauserman, Inc . (

In re Sunarhauserm an, Inc.) , 126 F.3d 811, 816 ( 6th Cir. 1997). The 1974 Plan f ur the r a sse rt s th a t it

wa s p re jud ic e d b y

the ba nk ru ptc y c ourt ’s bif

ur c a te d a na ly sis of its withdrawa l liabilit y

claim. That is, to the extent the bankruptcy court de termined that the 1974 Plan failed to de monstrate a dir ect link betwe en the a lleg ed bene fit to t h e Debtors’ estate a nd the postpetition wit hdraw al liability , the 1974 Plan a rg ues that it should have been pe rmitted to present

a dd iti on a l fa c tua l e vid e nc e re g ard ing qu anti fi c a tio n of the po stp e tit ion

po rt ion of the c la im a

nd its relationship t o the work pe rfor med by the Debtor s’ employ ees. A lternatively , the 1974 Plan alleg es th at th e po stp e tit ion

po rt ion of its wi thd ra wa l li a bil ity c la im i s e nti tle d to a dmi nis tr a tiv e pr ior ity under the Supreme Court’s de cision in Re ad ing Co. v . B ro wn , 391 U.S. 471, 88 S. C t. 1759 (1968). Specifica lly , the 1974 P lan charac terizes its withdrawa l liabilit y claim as a

statutory obligation that

wa s i n ci d en t al t o t h e o p er at i o no f t h e D eb t o rs ’ b u s i n es s es
. Ut i l i z i n g Reading , the 1974 Plan argues that su c h c la ims are e nti tle d to a dmi nis tr a tiv e pr ior ity , r e g ard less of w he the r t he De bto rs ’ e state

re c e ive d a

ny c or re sp on din g be ne fi t.
This Panel will address e ach of the 1974 Plan’s ar g uments in turn. Howeve r, bec ause a g ener al under standing of withdrawa l liability is crucia l to our analy sis of the 1974 Plan’s purporte d- 12-

administrative claim, we beg in our discussion with a brief r ecitation of the history of withdraw al liability , how it is calculate d, and whe n a cla im may arise in a bankruptc y

case
. A. Nature of Wi thdraw al Liab ility. 1. Historical Background and Purpose of W ithdrawal Liabil ity.
Be fore ERI SA was ame nded by the Multiemploy er Pension P lan Amendments Act of 1980, 29 U.S.C. §§ 1381-1453 (the “MPPAA”) , employ ers who w ithdrew fr om u n d erfunded pension plans wer e “not nece ssarily require d to pay

[t heir] share of

unfunded, ve sted bene fits.” CPT Holdings, I

nc. v. Indus. & Allied Employe es Union Pension Plan, Local 73 , 162 F .3 d 405 , 4 07 (6 th C i r. 1 9 9 8 ) ( ci t i n g Milwaukee Brewery W orkers’ Pension Plan v. Jos. Sc hlitz Brewing Co. , 5 13 U. S. 414, 416-17, 115 S. Ct. 981 (1995)). As long as the plan did not bec ome insolvent during the five y ear s following the employ er’ s withdrawa l, the employ er a voided all liability

. CPT Holdings , Inc. , 162 F.3d at 407 (citing 29 U.S.C. § 1364). Unfortunately , under this s y stem, “withdraw als of

c on tr ibutin g e mpl oy e rs fr om a mul tie mpl oy e r p e ns ion

pla n f re qu e ntl y re su lt[e d] in

su bs tanti a lly inc re a se d f

un din g ob lig a tio ns fo r e mpl oy e rs wh o c on tin ue [d] to c on tr ibute to t

he pla n, a dv e rs e ly aff ecting t he plan, its participa nts and bene ficiar ies, and labor -mana g ement re lations.” Bd. of Trustees, Mich. United Food &Commer ci a l W orkers Unions v. E

berhard Foods, Inc

. , 831 F.2d 12 58 (6 th C ir . 1 98 7) (q

uo tin g 29 U. S.C. § 1 00 1a (a )( 4) (A ) ( the pr e a mbl e to the MPPA A) ). Th is a lso “enc ourag ed an e mploy er to withdraw from a financially shaky plan and risk paying its shar e if the plan later beca me insolvent, rather

than to rema in and (if other s withdrew) risk having to bear alone the entire cost of kee ping the s h aky plan af loat.” Mi lwa uk

e e Br e we ry , 5 13 U. S. at 41 6- 17 . A s a result, “a plan’s financ ial troubles could trig g er a stampede f

or the doors, the reby

ensuringthe plan’s demise.” Id . at 41 7; see also Pe nsion Benefit Guar. Corp. v. R.A. Gray & Co. , 467 U.S. 717, 720-25 & n.2, 104 S. Ct. 2709 (1984) (descr ibing the circ umstances that led to enac tment of the MPPAA

and e xpla ini ngho w the fi ve y e ar loo k- ba c k ru le c ou ld a c tua lly e nc oura g e e mpl oy e r w ith dr awa ls i n some instances, the reby

trig g eringa “vic ious downward spira l” for the aff ecte d plan).

I n a n effo rt to a dd re ss t he se pr ob le ms –

that is , to “ pr ov ide a

dis inc e nti ve to w ith dr awa ls” and to “ mitigate the ir eff

ect” – Congr ess ena cted the MPPAA. Eberhard Foods , 831 F.2d at 1259. The MPPAA “imposed a w ithdrawa l char g e on all employ ers withdra wing from an underf

unded plan” reg ardle ss of whether or not the pl an later beca me insolvent. Mi lwa uk

e e Br e we ry , 5 13 U. S.Three of the a llocation methods set forth in the statut e

– t h e Presumptive, the Modified 11 Presumptive and the Rolling- 5 – “base the deter mination [of the withdraw ing e mploy er’ s share of unfunded ve sted bene fits] on the employ er’ s share of the plan’ s contribution base ove r fiv e-y ear p e r i o d s e n d ingw i t h t h e y e ar b e f o r e t h e e mp l o y e r ’ s w i t h dr aw a l

. ” Jay n e E

. Z an g l e i n& S u s anJ. Stabile, ERISA Litigation 1238 (2d ed. 2005). The f ourth method – Direc t Attribution – “bases the deter mination on the UVB attributable to the e mploy er’ s employ ees.” Id . at 1238-39. When an employ er w ithdraws during a cha pter 11 c ase, the 1974 Plan argues that a third 12 step is require d to determine w hat portio n o f t h e em ploy er’ s total withdrawal liability should be treated as an ad minist rative e x pense. That is, the 1974 Pl an asse rts that the employ er’ s total wi thd ra wa l li a bil ity mus t be a llo c a te d b e tw e e n th e pr e - a nd po stp e tit ion

pe ri od s.

- 13- a t 41 7; CPT Holdings , Inc. , 1 62 F .3 d at 4 07 (T he MPPA A “ re qu ir e [s] ‘w ith dr awi nge mpl oy e rs to pay their shar e of unf

unded, veste d benef

its reg ardle ss of the plan’s f uture succ ess.’” ). 2. Calculation of

W ithdrawal Liabil ity.
Under ERI SA as amende d by

the MPPAA, withdrawal liability repr esents an e mploy er’ s obligation to pay

its “proportionate sha

re of t h e p l an ’s u nfunded ve sted bene fits” at the time of withdrawa l. CPT Holdings , Inc. , 1 62 F .3 d at 40 7 ( c iti ng29 U. S.C. §§ 13 81 , 1 39 1; Concrete Pipe & Pr od s. v . Co ns tr. Lab or e rs P e ns ion Tru st , 508 U.S. 602, 608, 113 S. C t. 2264 (1993)). The deter mination of a w ithdrawingemploy er’ s “fa ir share of a pla n’s under funding ” is a two-ste p proce ss. Se e Mi lwa uk

e e Br e we ry , 513 U.S. at 417. First, the amoun t o f the plan’ s “unfunde d

v est ed bene fits” must be ca lculated. Id

. T h e M PP A A d e f in e s u n f u n d e d v e s te d b e n e f

it s a s the “diffe renc e betwe en the pr esent va lue of ve sted bene fits . . . ‘and the c u rr en t v al ue of the plan’s assets.’” CPT Holdings , Inc. , 162 F.3d at 407 (quoting 29 U.S.C. §§ 1381, 1391) (a dditional citation omitted). Second, the e mploy er’ s share of the u n funded ve sted bene fits must be determined. Mi lwa uk e e Br e we ry , 51 3 U. S. a t 41 7. Th e statut e se ts fo rt h fo ur me tho ds fo r maki ng this allocation. See 29 U.S.C. § 1391. These statutory methods g ener ally base the allocation on “the

11 compar ative number

of [the] employ er’ s cover ed wor kers in ea ch ea

rlier y ear and the re lated leve l of [the] employ er’ s contributions.” Mi lwa uk e e Br e we ry , 513 U.S. at 417. 12 Although the conce pt of withdrawa l liabilit y seems re lativel y straig htforwa rd, the considerations, calculations, and a ssumptions involved in de termining the amount of a w ithdrawing

e mpl oy e r’ s li a

bil ity are any thi ngbu t si mpl e . “ Th e a mou nt of a wi thd ra wi nge mpl oy e r’ s li a

bil ity is ini tia lly a sse sse d b y

the pla n s po ns or ,” and

if a dis pu te ov e r t

he a mou nt of wi thd

ra wa l lia bil ity ari se s,- 14-

the plan’s a ctuar ial assumptions and calc ulations are presumed corr ect unless they are proven to be

unrea sonable in the ag g reg ate or clea rly err oneous. Masters, Mates &Pilots Pension Plan v. USX Corp. , 9 00 F .2 d 727 , 7 30 (4 th C ir . 1 99 0) ; see 29 U.S .C . § 14 01 (a)(3 )(A) , (B)

. The wide rang e of

re a so na ble a ssumpt ion s th a t ma y be us e d b y

pla n s po ns or s in

makin g the wi thd

ra wa l li a bil ity calc ulat i on has ca

used the Six th Circuit to remark that “ the ac tual deter mination of withdrawa l l i ability is not an exact science .” Eberhard Foods , 8 3 1 F

. 2 d a t 1 2 6 1 ( d i s c u s s i n g i n t e r e s t r a te assumptions and holdi ng that the us e of a si x perc ent i ntere st rate by the trustees of

a multiemploy er p l an i n d et erm i n i n g t h e emp l o y er ’s wi t h dra wa l l i ab i l i t y wa s n o t u n re as o n ab l e) (c i t i n g Keith Fulton & So ns v . Ne w En gla nd

Te am ste rs , 7 6 2 F

. 2 d

1 1 3 7 , 1 1 4 2

- 4 3 ( 1 s tC i r
. 1 9 8 5 ) ); see als o I n r e CD Re alt yPa rtn e rs , 205 B.R. 651, 658 & n.9 (B ankr. D . Mass. 1997) (noti n g that the exist ence and

a mou nt o f a n und e rf un din g, whi ch wi ll le a d to wi thd ra wa l li a bil ity , is re late d to many fa c tor s,
sever al of whic h “ca

nnot be known or qua

ntified until the employ er a ctuall y w it h d r aws;” a nd “[e]ven then, many c an be quantified only by sophisticated guessing and estimating

. . . .”) ( emphasis adde d).
For instance, a s the bankruptc y court corr ectly noted, the existence a

nd amount of unfunde d

ve ste d be ne fi ts a t the tim e of wi thd ra wa l fr om a pla

n is a ff e c te d by many fa c to rs. As pr e vio us ly stated, this calculation f

irst r equire s a deter

mination of the prese nt value of ve sted bene fits under the plan. The “ level of [a] plan’s l i ab i lity for pe nsion benefits . . . may vary over time a s a re sult of chang es in contra ctual promises (such as a ne g otiated incre ase in be nefit leve ls), in actuar ial assumptions (as to employ ee long evity , for e x ample), a nd in o t her f

actor s.” In re CD Re alt y Pa rtn e rs , 2 05 B .R. a t 65 8; see also J ay ne E. Z ang lein & Susan J. St abile, ERISA Litigation 1237 (2d ed. 2005) (e x plaining that the valuation of ve sted bene fits under the pla n may also requir e
c on sid e ratio n o f d e mog ra ph ic fa c tor s, su c h a s th e pla n p a rt ic ipa nts ’ r e tir e me nt a g e s and

mor ta lity
rate s) . T he c a lc ulatio n of the “ pr e se nt v a lue ” of ve ste d b e ne fi ts a lso re qu ir e s th e pla n’ s a c tua ry to discount the future stream of benef it pay ments at an appropr iate intere st rate. Eberhard Foods , 831 F .2 d at 12 59 ; see also ERISA Litigation at 1237. “Incre asing the intere st rate a ssumption decrea ses the employ er’ s withdrawa l l i ab i l i t y .” Eberhard Foods , 8 31 F .2 d a t 12 60 . E ve n “ [a] s ma ll

a dju stm e nt i n th e int e re st r a te a ssumpt ion c an le a d to a

ma jor c ha ng e in th e wi th dr awa l li a bil ity calc ulation.” Id

. Th e va lue of

a pla n’ s a sse ts m ay

lik e wi se be a ff

e c te d b y se ve ra l f a c tor s. Chi e f a

mon g the se fac tors are the amounts contributed by participating employ ers and the “ leve l of return on the plan’sAs explained by the United States Court of Appe als for the Four th Circuit, a five-year 13 MMAa pp ro a c h v a lue s a

pla n’ s a sse ts: by using the aver ag e value of those assets over the past five year s, with eac h y ear ’s mark e t va lue e qu a lly

we ig hte d in

the c omp utatio n. A f ive -ye ar M MAis a conser vative appr oach to a sset valuation, as it takes account of chang es i n asset value a t th e rate of 2 0% per y e ar; in o the r w or ds , a n in c re a se or

de c re a se in t

he [pla n’ s] assets will only

be fully incorporated into the valuation af ter fi v e y ear s. Thus, the MMAa pp ro a c h mo de rate s th e imp a c t of se ve re fl uc tuatio ns in t

he sto c k ma

rk e t. USX Corp. , 900 F.2d at 731.

- 15- investme nt of those contributions .” In re CD Re alt yPa rtn e rs , 205 B.R. at 658 ( emphasis adde d). The re turn on the plan’s inve stments is affec ted by the ty pes of investments chose n by the plan’s trustees a nd the per formanc e of the financial marke ts. Valuation of the pl an’s assets also involves the use of va

rious actua

rial methods and a ssumptions . For example, assets may

be value d at cur

rent

m ark et v a l u e o r u n d er

ce rt ai no t h er

ac ce p t edac tu ar i al m et h o d s , s u ch as a m o v i n g m ark et av er age (“MMA” ). ERISA Litigation at 1237. In the Four th Circuit case USX Corp. , the pension pl an’s 13 use of a five-year MMA to value its assets re sulted i n a withdrawal liability char g e ag ainst the employ er that was seve nty -five pe rce nt highe r than would have been assessed if the pl an had use d

a cur rent mar ket value. US

X Co rp ., 90 0 F .2 d at 73 1. Al tho ug h th e F ourt h Ci rc uit Court of Ap pe a ls conclude d that the use of the MMA was not unr easona ble and did not res u l t i n a “substantial underva luation” of the pla n’s assets, the c ase illustrates how r elatively small chang es in ac tuarial assumptions can lea d to larg e disparities in asse t valuation and, in turn, to lar ge diffe renc es in the amount of a pla

n’s unfunde d vested be nefits. Id . at 733.
As demonstrate d by

the fore g oing examples, the amount of a pe nsion plan’s unfunded ve sted benef its may be g reatly

mag nified by

fac tors completely

unrelated t o the wit hdraw ing employ er or its c overe d employ ees. The individual e mploy er’ s proportionate share of the unfund ed vested benef its is m ore c losely

linked to the employ er’ s past participation in the plan but, at least under the Rol lin g -5 me tho d, a lso de pe nd s o n th e ho ur s wor ke d by e mpl oy e e s of o the r c on tr ibutin g e mpl oy e rs
. Trustees of the Amalgamated Ins. Fund v . McFarlin’s, Inc

. , 7 8 9 F.2d 98, 103 ( 2d Cir. 1986) (an employ er’ s proportionate sha re of a plan’ s unfunded vested benef its is “extrapolate[d] .

. . from such fa c tor s a s th e e mpl oy e r’ s p a st c on tr ibutio ns to t he pla n an d the po rt ion

of the pla n’ s unf un de d b e ne fi t obligations attributable to the employ er’ s employ ees) (citation omitted).Al tho ug h th e ba nk ru ptc y c ourt did no t a dd re ss L e xing ton

Coa l ’ s a s se rt ion

that th e De bto rs ’ 14 withdrawa l liability stemmed from their reje ction of t he collective bar g aining ag ree ments, and thus s h o u l d re l at e b ac k

t o t h e da t e im m ed i at el y

p re ce d i n g t h e f

i l i n g o f t h e c h ap t er

1 1 ca s e u n d er

§ 3 6 5 (g) and § 502(g ) , we note that the Six th Cir cu i t ’s dec ision in CPT Ho ldi ng s se ve re ly un de rc uts thi s argume nt. With dr awa l li a bil ity do e s n ot d e ri ve fr om t he c oll e c tive bar g a ini nga g re e me nts themselves, but “is a pr oduct of the MPPAA.” C P T Ho l d i n g

s , Inc. , 1 62 F .3 d at 40 7; see McFarlin’s, Inc

. , 789 F.2d at 104 n.2. As the Six th Circuit ex plained in CPT Holdings , “ther e ca n be no pre -withdraw al bre ach of ERI SA g iving rise to a ‘rig ht to pay ment’ by a plan.” CPT

Ho ldi ng s, Inc. , 162 F.3d at 409. Accor dingly , “a ‘ claim’ c annot exist prior to withdraw al.” Id

.

- 16- 3. W hen Doe s the W ithdrawal Liabil ity Claim Arise?

I n the bankr

uptcy context, a question is also p re s en t ed as to when a claim for w ithdrawa l liability arises. The Six th Circuit addresse d this question in CPT Holdings, Inc. , 1 6 2 F

. 3 d 4 0 5

. In CPT Holdings , th e de bto r w ith dr e w f ro m it s pen sio n plan e ig hte e n mo nth s afte r its chapter 11 pla n
was c onfirmed. The issue was whe ther the pe nsion plan had a “ claim” f or wit h draw al liability

as of the date of c onfirmation, such that the c laim was dischar g ed. See 11 U.S.C. § 1 1 4 1 (d )( 1 )(A) (unless t he plan or confirmation order provides otherwise, confirmation “dischar g es a de btor from any debt that ar ose bef

ore the date of

such conf

irmation”). Answ eringthis question in the neg ative, the Six th Circuit held that a “c laim” for w ithdrawa l liabilit y “ca nnot exi st pr ior to withdrawa l.” Id. at 409. The c ourt explained that, in contrast to an e mploy er’ s failure to satisfy monthly or annua l funding require ments, which would g ive ris e to an immediate r ight to pay ment by the plan,

“ wi thd ra wa l li a bil ity is pr e mis e d on an e mpl oy e r’ s pro po rt ion a te sh are of un fu nd e d v e ste d b e ne fi ts at the time of withdraw al .” CPT Holdings , Inc. , 162 F.3d at 407 (emphasis in origi n al ) (c itations

om itted ); see also ERI

SA Liti gation a t 1 2 1 0 ( w it

h dr aw a l li a

b il it y is “ an im me diate and nonconting ent liability

that the employ er ow es to the plan whe n it withdraws”)

. Acc ording ly , “[a] multiemploy er pe n s i o n p l an has no enforc eable rig ht to pay ment for withdra

wal liability

until an employ er a ctually

withdraws f

rom a plan, leaving the pl an under funded. Since this may never occur , it cannot be said that a lega l rig ht to pay ment exis ts prior to withdrawa l.” CPT Holdings , Inc. , 162 F.3d at 409. I n light of this binding a uthority , the bankr

uptcy court prope rly

deter mined that the withdrawa l liabilit y

claim in this case did not arise until the Debtors withdrewfrom the 1974 Plan, almost two y ear s postpetition. 14- 17-

B. The “Benef

it to the Estat e” Test. As the ba nk ru ptc y c ourt e xpla ine d, the fa c t th a t th e De bto rs ’ w it hd rawal lia bil ity aro se postpetition does not automatically mean that the liability , or any portio n th e r e o f , is an administrative expense. See Trust ees of the Amalgamated Ins. Fund v. Mc Farlin’s, Inc. , 789 F.2d 98, 101 ( 2d Cir. 1986) (“ A debt is not entitled to priority simply beca use the rig ht to pay

ment arises a fter the debtor in p os se ssi on

ha s b e g un man agin g the e state .” ). To be a ff or de d a dmi nis tr a tiv e pr ior ity , th e c la im must sti ll meet the statutory definition and the test utiliz ed by the Six th Circuit.
The B ankrup t cy

C o d e gr an t s ad m i n i s t ra t i v e p ri o ri t y s t at u s t o cl ai m s fo r “ t h e a ct u al , nece ssary costs and ex penses of prese rving the estate , including w ag es, salar ies, or commissions for ser vices

re nd e re d a ft e r t

he c omm e nc e me nt o f t

he c a se [.]” 11 U. S.C. § 5 03 (b )( 1) (A ); see 11 U. S.C. § 5 0 7 ( a ) ( 1 )

. T h e p u r

p o s e o f th is p r o v is io n “ at le a s t in th e li qu id a ti o n c o n te xt, is to f a c ilitate the

c on tin ue d o pe ratio n .
. . of

de bt ors -in- po sse ssi on

‘b y e nc oura g ingthi rd

pa rt ie s to pr ov ide tho se businesses with nece ssary g oods and service s’ that enable the maxi miz ation of value for c reditors of the e state upon liquidation.” Zurich Am. Ins. Co. v. Lexington Coal Co. ( In re HNRC Dissolut ion Co.) , 3 7 1 B.R. 210, 224 (E.D. Ky . 2007), aff’d , 5 3 6 F. 3 d 6 8 3 (6 t h C i r. 2 0 0 8 ) ( qu o t i n g U n ited Trucking Serv., I

nc. v. Trailer Rental Co. (

In re United Trucking Serv., I nc.) , 8 51 F .2 d 1 59 , 1 61 (6 th Cir. 1988) ). Be cause “priority claims reduc e the f unds available for c reditors a nd other c laimants,” it i s w e ll e sta

bli sh e d th a t “ [c]la ims fo r a dmi nis tr a tiv e e xpe ns e s und e r § 50 3( b) are str ic tly construed.” City

of W hite Plain s, N.Y. v . A & S G all e ria Real E sta te , I nc . ( In re Fe de ra te d D e

pt. Stores, Inc.) , 270 F.3d 994, 1000 ( 6th Cir. 2001); see M cFarlin’s, Inc ., 789 F.2d at 101-02 (citations omitted).
To deter mine whether

a cla im qua lifies as an “ac tual and nece ssary” administrative expense, the S ix th Circuit routinely applies t he “be nefit to the estate test.” See Pension Bene fit Guar. Corp. v. Sunarhauserman, I

nc. ( In re Sunarhauserm an, Inc.) , 1 26 F .3 d 81 1, 81 6 (6 th Cir . 1 99 7) . U nd e r t his test, a debt qua lifies as an a dminist rative e x pense “ only if (1) i t ar o se fr om a transa ction with the bankruptc y

estate an d (2 ) d irec tly

and substantially

benef itted the estate.” Id . (citing Employe e T r a n s f er C o r p
. v. Gr i g s b y (I n r e Whi t e M

o t o r C o r p
. ), 831 F.2d 106, 110 (6th Cir. 1987) (additional citations omitt ed)) . “The claimant has the burden of demonstrating entitl ement to an a dminist rative expense priority

by a pre pondera

nce of the evidenc e.” In re Lib e rty Fi be rs C or p ., 383 B.R. 713, 717 (B ankr. E.D . Tenn. 2008).- 18-

F or purp os e s o f thi s app e a l, the Pane l w ill a ssume that th e 19 74 Plan’ s a dmi nis tr a tiv e c la im

aro se fr om a tr ans a c tio n wi th the ba nk ru ptc y e state , th e re by

satis fy ingthe fi rs t pr on g of

the “ be ne fi t to the estate” test. The 1974 Plan’s administrative c laim arose dur i n g t h e p o stpetition period and

asser tedly relates to postpetition hours wor k ed b y the Debtor s’ employ ees. See In re Sunarhauserman , 1 26 F .3 d at 81 7 ( “ [I ]t is a n a bs olu te re qu ir e me nt f

or a dmini st rat ive e xpe ns e priority that the liability

at issue ar ise post-petition.”)
Acc ording ly , the central, and ulti mately dispositi ve, issue in this appea l is whether the 1974 Plan has demonstrate d that the asserted pror ated postpetition portion of the De btors’ withdraw al lia bil ity dir e c tly and

su bs tanti a lly

be ne fi tte d th e e state . N e ith e r t he B ank ru ptc y Cod e no r t

he Sixth Cir c uit ha s d e fi ne d th e te rm s “ dir ect ” and “ su bs tanti a l,” so we mus t c on str ue the se te rm s in

acc ordanc e with their ordina ry meaning s. See The Limited, Inc . v. Comm’r , 2 86 F .3 d 3 24 , 3 32 (6 th Cir. 2002) (“When the text of a statute c ontains an undef ined term, that ter

m rec eives its ordinary and natur al meaning .”) ( citation omitted).
The dictionar

y definition of “dire ct” sug g est s t hat the asse rted be nefit must be “f ree from extraneous influenc e” a

nd “immediate.” Black’

s Law Dictionar

y (8th ed. 2004); W

e bs te r’ s Th ird New International Dictionary 640 (1986) (direc t me ans “stemming immediately from a s o urce ; having no compromising or impairing element; chara cter ized by or giving evidenc e of a close . . .

causa l . . . r elationship; ma rked by absenc e of an intervening ag ency , instrumentality , or influenc e”) ; cf., e.g., Officeof Thri

ft Supe rvision v

. Ove rland Park Fin. Corp. ( In re Ov erland Park Fin. Corp.) , 23 6 F .3 d 12 46 , 12 52 (1 0th Cir

. 20 01 ) (“ Whe n Con g re ss do e s no t de fi ne a wo rd [in a statute] , its common and ordina

ry usag e may

be obtained by

ref er ence to a dictionary .”). To be considere d “substantial,” the be nefit must also be “r eal,” “true ,” “importa nt” or “ essential.” W

e bs te r’s T

hir d New International Dictionary 22 80 (1 98 6) ; see also I n re Kmart Corp. , 290 B.R. 614, 621 (Bankr

. N. D. I ll. 2003) (The a dminist rative “ claimant must demonstrate that the benef it is m ore tha

n a speculative or potential bene fit.”).
The 1974 Plan ar g ues that the De btors’ employ ees pr ov i d ed a benefit to the bankruptc y estate by continuing to wor

k afte r the filing of the Debtors’ cha pter 11 c ase. The rec ord establishes that the De bto rs op e rate d fo r a lmo st tw o y e ars a ft e r fi lin g the ir c ha pte r 1 1 p e tit ion s. Duri ngthi s ti me period, the Debtors’ UMW A employ ees worked a combined tot al of 2,976,962 hours. In addition- 19-

to wag es, the c ompensation for these employ ees included the acc rual of pension cre dit for the hours worke d during the postpetition period. Acc ordi n g t o t h e 1 9 7 4 Plan, the work of the se employ ees fac ilitated the continued oper ation of the De btors during the chapte r 11 proce eding , prese rved the bu sin e sse s’ g oin g -c on c e rn va lue , a nd e ve ntu a lly

le d to the sa le of the De bto rs ’ a sse ts at a fa vo ra ble price

. Th is P ane l a g re e s w iththe 19 74 Plan’ s a sse rt ion that th e De bto rs ’ b ank

ru ptc y e state benef itted from the postpetition work provided by its UM WA employ ees. We fur ther a g ree that debts with a direc t relationship to the postpetition work of the Debtors’ employ ees ma y be entitled to a dmi n is tr a tive status. See I n re W illiam B. Kessler, Inc. , 23 B.R. 722, 726 (B ankr. S.D.N.Y

. 1982), aff’d , 55 B.R. 735 (S.D.N.Y. 1985) (stating that employ ees w ho work postpetition are entitled to rec eive f

ull benef its flowing direc tly from their postpetition employ ment). F or the re asons that fo llo w, ho we ve r, we ho ld t hat th e 19 74 Plan f

a ile d to e sta

bli sh that it s w ith dr awa l li a bil ity c la im

re la te s d ir e c tly

to t he wo rk pe rf or me d by the De bto rs ’ e mpl oy e e s p os tpe tit ion . T he re fo re , th e c la im is not entitl ed to priority

as an a dminist rative e x pense.
Th e c on sid e ratio n f

or the po stp e tit io n

w o r k o f t h e D e b t o r s ’ e m

p l o ye e s , wh ic h unq

ue sti on a bly benef itted th e e s tate , in c lu d e d

th e p ay me n t o f p o s tp e ti ti o nw a g e s to th e s e e mp lo y e e s , a s w e ll as
acc rual of othe r bene fits, such as vac ation pay

. The Bankr uptcy Code rec og nizes the importance of thi s p os tpe tit ion

wo rk by ex pl icitl y

g ra nti ngpo stp e tit ion

wa g e s and

oth e r b e ne fi ts attr ibuta

ble to po stp e tit ion

e mpl oy me nt a dmi nis tr a tiv e pr ior ity , p ro vid e d th e e mpl oy e e s’ se rv ic e s are ne c e ssa ry to the pr e se rv a tio n o f t

he ba nk ru ptc y e state

. 1 1 U

. S

. C

. §5 03 (b )( 1) (A ) ( a ff or din g a dmi nis tr a tiv e pr ior ity t o “t h e act u al , n ec es s ary co s t s an d ex p en s es o f pr es erv i n g t h e es t at e, i n cl u d i n g wages, salaries, and

c om mi ssi on s for se rv ic es re nd

e re d afte r the c om me nc e me nt of t hec as e . . .” ) (e mph a sis a dd e d) ; see g e n e r a lly Wil liam L . Norton, Jr., Norton Bankruptcy Law and Practice 3d , § 49:20 (stating that allowanc e of a dminist rative c laims for postpetition wag es is fairly routine i n chapte r 11 cases whe re the debtor’ s business continues to operate postpetition and noting that most cour t s al so allow administrative claims for

some ty pes of va cation and se vera nce pa y ).

I n addition to wag es, the Six th Circuit has held that th e “n o rm al” c ost component of a debtor’s postpetition minimum funding contributions to a define d benef it pension plan may

be g iven priority as admin i s t ra t i v e ex penses unde r § 503(b) (1)( A), at least to the extent it relates to hours- 20-

actua lly worke d by a debtor’s employ ees postpetiti on. In re Sunarhauserm an , 126 F.3d at 816-17. I n Sunarhauserman , the Pension Be nefit Gua ranty Corporation (“ PBGC”) filed an a dminist rative claim ag ainst the debtors for unpaid minimum funding contributions that acc rued be tween the filing of the de btors’ bankr

uptcy case s and the t er m i nation of the de btors’ pension plan. The PBGC’s administrative claim in c lu d e d a “ n o r ma l” c o s t c o mp o n ent, which r epre sented a n actua rial ca lculation of the c ost of pension benef its ba sed on projec ted employ ment of the debtors’ employ ees dur ing the pla n y e ar. Th e c la im a lso inc lud e d a “ no n- no rm a l” c os t c omp on e nt, wh ic h c on sis te d a lmo st e nti re ly of an a ctuar ial allocation of ex perie nce losses attributable to prepe tition liabiliti es. The bankruptcy court a llow ed t h e “normal” c ost component of PBG C’s administrative claim, but adjusted the amount o f t h e cl aim to acc ount for wor kforc e re ductions and a f ree ze in benefit ac crua ls that

oc c ur re d p os tpe tit ion . T he ba nk ru ptc y c ourt c on c lud e d, ho we ver, th at th e “ no n- no rm a l” c os t component of PB GC’s claim wa s not entitled to administrative priority

. In re Sunarhauserm an, Inc. , 184 B.R. 273, 278 (B ankr. N .D. Ohio 1995). On a ppeal, the district court af firmed the ba

nkruptcy court’s de cision.

I n Sunarhauserman , the Six th Circuit affirme d the dec isions of the bankruptcy and district

c ourt s. Ap ply

ingthe “ be ne fi t to the e state ” test , th e cou rt e xpla ine d th a t “ it i s a n a bs olute require ment for administrative expense priority that the liability at issue ar ise post-petition.” In re Sunarhauserman , 126 F.3d at 817. The court rec og nized that the liabilit y for the e ntire amount of PB G C’ s c la im ar o s e u n d e r E RI SA w h e n th e p la n y e ar e n d e d d

u r in g th e a dmi n is tr a ti o n of the debtors’ ba

nkruptcy case s. This did not, however, r esult in the entire c laim being allowed a s an administrative expense. Rather , the cour t expl ained that “ reg ardle ss of the substantive law on which the c la im is bas e d, the pr op e r s tand ard fo r d e te rm ini ngthat c la im’ s a dmi nis tr a tiv e pr ior ity loo ks to when the a cts g iving r ise to a liability took place, not whe n they acc rued.” Id

. at 8 1 8 (c i t i n g In re Jartran, Inc. , 7 32 F .2 d 5 84 (7 th C ir . 1 98 4) ; Cra me r v . M am mo th M

ar t, I nc . ( In re Ma mm oth Ma rt, Inc.) , 536 F.2d 950 (1st Cir. 1976)). B eca use the “ non-normal” cost component of the PBGC’s

c la im r e la te d to pr e pe tit ion lia bil iti e s, the Sixth C ir c uit c on c lud e d th a t it

wa s n ot ent itled

to administrative priority . The Six th Circuit also reduce d the “no rm al ” cost c omponent of PBGC’s claim to acc ount f

or workfor ce reduc tions a nd a fre eze in be nefit acc ruals that occur red postpetition. Th e c ourt a c kn ow le dg e d that, un de r E RI SA, the de bto rs we re bo un d to fu lly fu nd the pla n a ft e r t he ir bankruptc y

case s were filed, reg ardle ss of t he chang es i n plan bene fits that subsequently occur red- 21-

during the plan y ear
. The court explained, how ever , that it wa s “appr opriate to viewas ‘a ctual and

ne c e ssa ry ’ o nly that po rt ion of the [d]e bto rs ’ po st- pe tit ion fu nd ing ob lig a tio n th a t [c ou ld] b e tie d to employ ees’ actua l post-pe tition servic es – i.e., hours actua lly work by employ ees post-f iling.” Id

. at 820. Acc ording ly , the “nor mal” cost component of PB GC’s claim wa s entitled to administrative priority , but only

to the extent that it related to benef its actually

ear ned postpetition.

I f postpetition mini mum funding c ontributions to a pension plan may be g iven adminis tr a

ti ve p ri o ri t y under the Six th Circuit’s decision in Sunarhauserman , it s e e ms a p p r o p r iate to a s s e rt that claims for w ithdrawa l liabilit y relating to postpe tition work by a debtor ’s employ ees should also be entitled to priority

status. After a ll, as expl ained by the bankruptc y

court in In re Pulaski Highway Ex pr ess : Employ ees a s part of the collective ba rg aining proce ss neg otiate the ter ms and conditio n s o f their pe nsion rights, a nd that obligation is enforce able by the union members as ei t h er a

contra ctual or statutory

rig ht. I t is an integ ral pa rt of the compensation scheme a g ree d to by the debtor a nd its employ ees. See ERI SA § 502, 2 9 U

. S. C. § 1 132(a) (3) a nd see also H.R. Rep. No. 869, 51, 53, reprinted in 1980 U. S. Co de C o n g
. & A d

. N e w s a t 2 9 2 1

. T h e e s s e n c e o f w i t h d r aw a l l i a b i l i t y i s to ensure that employ ees rec eive the benef its whic h they

have ba rg ained f or and e arne d. See H.R. Rep. No. 869, 53 reprinted in 1980 U.S. Code Cong. & Ad. New s at 2921.

In re Pulaski Highway Expre ss, Inc. , 57 B.R. 502, 508 n.11 (B ankr. M.D. Tenn. 1986). In light of its c on c lus io n that

wi thd ra wa l li a bil ity is p art of the c omp e ns a tio n g ive n to e mpl oy e e s in consideration for their postpetition efforts, the Pu las k i c ourt de te rm ine d th a t th e wi thd ra wa l li a bil ity

c la im i n th a t c a se sh ou ld b e pr or a te d, wi th t he po stp e ti ti on po rt io n of t he c la im b e inge nti tle d to tr e a tme nt a s an a dmi nis tr a tiv e e xpe nse. Th e c ourt re a so ne d th a t, “ [a]lt

ho ug h w ith dr awa l li a

bil ity may be trig g ere d by

a post-petition event,” the “‘ rig ht to pay ment’ is inc urre d when the employ ee benef its become nonfor feitable .” Id

. at 507. “B eca use the ‘cla im’ for bankruptc y purposes a

rises from the a ccr

ual of e mploy ees’ vested rig hts rather than the ac t of withdrawa l, and bec ause the debtor did ha

ve a short period of post-pe tition operations,” the cour t concluded that a portion of the pension plan’s c laim could be “prope rly char acte rized as post-petition.” Id . 507-08. The Pulaski

c ourt de c lin e d to determ in e, on th e re c or d b e fo re it, wh a t po rt ion of the c la im w a s e nti tle d to administrative status. The c ourt noted that ERI SA provides four dif fer ent methods for c alculating withdrawa l liabilit y , but acknowle dg ed that none of those methods wer e “desig ned with the task he re- 22-

in mind – the allocation of withdrawa l liability acr oss a point in time f ormed by a bankr uptcy filing.” Id . at 511 n.17.
Severa l other cour

ts appea r to ag ree with Pulaski ’s c on c lus ion that wi th dr awa l li a

bil ity should be divided into pre- a nd postpetition components, and that the po s t p et i t ion portion of the claim m ay be afforde d administrative priority

. See, e .g. , McFarlin’s, Inc ., 789 F.2d at 103 (holding that withdrawa l liabilit y

claim was not e ntitled to adminis trative prior ity beca use t he conside ration

su pp or tin g the c la im was the wo rk of the de bto r’ s e mpl oy e e s d ur ingthe pr e pe tit ion

pe ri od ); In re Great Northeastern Lumber &Millwork Corp. , 64 B.R. 426, 4 2 8 ( B ankr. E.D . Pa. 1986) (c oncluding that w ith dr awa l li a

bil ity c la ims are no t e nti tle d to a dmi nis tr a tiv e status un le ss the y are “ a ttr ibuta

ble to wa g e s e arn e d a ft e r the fi lin g of the pe tit ion ” ); In re Cott Corp. , 47 B.R. 487, 495 (B ankr. D . Conn. 1984) (dividing wi t h d ra wa l liabilit y claim into pre- a

nd postpetition components based upon the period c overe d by

the claim and a ffor ding the postpetition portion p riority as an a dminist rative claim). The rea soning of these c ourts is simi lar to Pulaski ’s analy sis. As the United States Court of Ap p e a ls f

o r th e Se c o n d

Ci r c u it h a s e xp la in e d , w it

h dr aw a l l ia

b il it y “ is d e s ig n e d

to in s u r e tha t befor e lea

ving a plan an e mploy er w ould pay his ‘proportionate’ share of the pl an ’s l iability for

ve ste d b ut u

nf un de d b e ne fi ts attr ibuta

ble to w or

k a lr e a dy pe rf or me d. Th a t li a

bil it y us ua lly

acc umulates over a

period of y ear s prior to the depa rture of the withdraw ing e mploy er.” Mc Fa rli n’ s, Inc ., 789 F.2d at 103 (internal c ita t ions omit ted). The ref ore, “ [t ]he consideration supporting the withdrawa l liabilit y

is . . . the same as that supporting the pe nsions themselves, the past labor of the employ ees c overe d by

the [p] lan.” Id . at 101-0 2 (c i t at ions omit ted). Ac cordingto the Second Cir c uit , th e wi thd

ra wa l liab ili ty c la im is tre a te d as a g e ne ra l unse c ur e d c la im t o th e e xten t th is p a st labor oc curr ed pre petition. Other cour ts have e x tended this premise to conclude that, to the extent the labor oc curr ed postpetition, the resulting claim m ight be entitled to administrative priority

. See, e.g., In reCott Corp. , 47 B.R. at 495.

I n this c ircuit, the rea soning of Pulaskiand these other c ourts has bee n sever ely erode d by CPT Holdings

. I n CPT

Ho ldi ng s the Sixth C ir c uit

un e qu ivo c a lly

he ld that a cla im , or

“ ri g ht t o pa y me nt, ” fo r w ith dr awa l li a bil ity c ou ld n ot a

ri se pr ior to a deb to r’s a c tua l w ith dr awa l f ro m it s pension plan. CPT Holdings , Inc. , 162 F.3d at 409. Thus, Pulaski ’s deter mination that a withdra

wal liability claim ar ises from t he on-g oing a ccr ual of e mploy ees’ vested rig hts rather than from the withdrawa l itself has bee n unquestionably constraine d, if not neg ated, by Six th Circuit case la

w.Th e dete rm inatio n o f t he De bto rs ’ s ha

re of the tot a l un fu

nd e d v e ste d b e ne fi ts i s 15 p r o b l e m a t i c
. D e p e n d i n gu p o nt h e m e t h o d

u s e d , t h i s d e t e r

m i n a t i o nm i g h tv ar

y g r e a t l y.

- 23- I n the pre sent appe al, the 1974 Plan c orre ctly asser ts that the Debtors’ U MWA employ ees worke d during the postpetition period and earne d pension cre dit as a r esult of that work. U nder the Rolli ng -5 method, these hour s were i n cl uded in the ca lculation of the De btors’ total withdrawa l lia bil ity – that is , th e de te rm inatio n o f t he De bto rs ’ s ha

re of the 19 74 Plan’ s unf

un de d v e ste d b e ne fi ts at the ti m e o f wi t h d raw al. After deter mining the De btors’ shar e of the total unfunded ve sted 15 benef its, the 1974 Pl an utiliz ed anothe r ca lculation to attempt to prorate the l i ab i l ity betwee n the pr e pe tit ion

and po stp e tit ion

pe ri od s. We sum mari ze the fo rm ula a s fol low s: the fi rs t multi pli e r i s the postpetition hours worked by the Debtor s’ covered employ ees divided by the t otal hours worke d by the cove red e mploy ees both pre - and postpetiti on. This frac tion is t hen multiplied by the statutory wi thd ra wa l li a bil ity . The pr od

uc t is the pr or a te d w ith dr awa l li a bil ity tha t is a sse rt e d a s an a llo wa

ble administrative expense. The major issue, how ever , and the ba sis for our disag ree ment with Pulaskiand other case s that a dv oc a te pr or a tio n of the wi thd ra wa l liab ili ty

c la im, is that th e a mou

nt o f w ith dr awa l li a

bil ity to be a sse sse d ag a ins t a

wi thd ra wi nge mpl oy e r, if

any , is alw ay

s depende nt upon fac tors that are not direc tly related to the postpetition wor k of a de btor’s employ ees. A s discussed in detail above , the first step in deter

mining an e mploy er’ s withdrawa l liabilit y is to calculate the plan’s unf unded veste d be ne fi ts at the tim e of wi thd ra wa l. Th e e xiste nc e of un fu nd e d ve ste d be ne fi ts at any po int in t ime is, in turn, driven by

a my riad of f actor s including inter est rate assumptions, the perfor man ce o f a plan’s investm ents, and other actua rial m ethods utiliz ed by the plan’s sponsors. Se e In re CD Re alt y Pa rtn e rs , 2 05 B .R. a t 65 8 & n. 9 (t he e xiste nc e and a mou

nt of an un de rf

un din g , w hic h w ill le a d to withdrawa l liabilit y , is related to many fac tors which “ can be quantified only b y sophi sticated guessing and estimating . . . .”) ( emphasis adde d). The inf luence o f t h es e outs ide fa ctors and investment market r esults on the withdrawa l liabilit y calc ulation are illust rate d in this appeal. The 1974 Plan acknowle dg es that the a ctuar ial funding defic it it ex perie nced in the P l an Year e nding June 30 , 2 00 1, wa s th e re su lt o f a “ numbe r o f fa c tor s, inc lud ing a sig nif ic ant dip in t

he sto c k ma

rk e t, a lac k of incoming contributions, and cha ng es in pensions.” (A

ppellant’s Br. at 8.) Moreove r, the 1974 Plan’s calc ulation of i ts total unfunded vested benefits at t he end of t he 2004 P lan Yea r wa s
re du c e d f ro m a pp ro xima te ly

$2 .1 bil lio n to a

pp ro xima te ly

$1 .8 bil lio n a s th e re su lt of a c ha ng e inOn Octobe r 9, 2007, the DowJ ones Industrial Aver ag e (“ DJ I A”) , a lea ding stoc k marke t 16 indicator, re ache d an all-time hig h at 14,164.53. One year and one day later, on October 10, 2008,

- 24- the 19 74 Plan’ s in te re st rate a ssumpt ion . Thi s r e vis e d in te re st r a te a ssumpt ion c a us e d th e De bto rs ’ tot a l w ith dr awa l lia

bil ity to de c re a se fr om a

pp ro xima te ly $1 63 mil lio n at th e tim e the or ig ina l c la im

wa s f ile d to a pp ro xima te ly

$1 38 mil lio n, wh ic h is the ba sis fo r t he Am e nd e d Cl a im. The impac t of these outside fa ctors on the a ssessment of withdraw al liability is the essential element that distinguishes withdraw al liability from other

considera

tion for the postpetition work of

a de bt o r ’ s e mp l o y e e s
. A s d i s c u s s e d a b o v e , w a g e s h a v e a

d i r e c tc a u s a l l i n k t o ane mplo y e e s’ postpetition work and ar e g ener ally al l o wed as administrative expenses. See 11 U. S.C. § 503(b)( 1)(A) . “Nor

mal” contributions t o a pension plan a re a lso ty pically linked to the hours worke d by a debtor’s employ ees. Thus, these contributions ma y be all o we d as ad minist rative expenses under the Six th Circuit’s decision in Sunarhauserman

. Howeve r, to e mphasize its holding that such contributions c ould only be af forde d priority

to the extent that they

wer e linked to “hour s actua lly worke d by

employ ees post-f

iling, ” the Sunarhauserman court re duced the administrative claim in that case to a ccount for workfor ce reduc tions a nd a fre eze in be nefit acc ruals that occ urre d postpetition. In re Sunarhauserm an , 126 F.3d at 820.
Wit hdraw al liability

claims do not have the same causal connection t o the postpetition work perf ormed by a debtor ’s employ ees as t h ese other categ ories of e x penses. This is bec ause the calc ulation of a plan’ s unfund ed vested be nefits and c onsequently , the assessment of withdrawa l liability ag ainst a particula r employ er, will alway s be a f unction of numerous f

actor s that are not, and

c ann ot b e , d ir e c tly

lin ke d to the po stp e tit ion wo rk su pp lie d by the De bto rs ’ e mpl oy e e s. Th e mos t signific ant fa ctor may

be the r eturn on the investments of the pension funds. Se e In re CD Re alt y Pa rtn e rs , 205 B.R. at 658.
Rece nt economic a

nd stock marke t gy

rations, mostly

downwar d, support our analy sis. The investment perf

ormanc e of ma

ny retire ment funds has been detrimentally aff ecte d. The withdra

wal liability imposed as a r esult of a plan te rminated last we ek wil l b e fa r greater than w ithdrawa l liability that may have arisen a y ear ag o. The amount of the liability , along with any at t em p t ed proration thereof, is sig nificantly impacted b y m ar k et forc es. These forc es under cut the asse rtion that the prorated liability

resulted f rom a “ direc t and substantial” bene fit to the estate. 16the DJI A closed at 8,451.19. Marke ts Li neup , Wall S t. J ., Oct. 13, 2008, at C4. On the next day that the marke ts opened, October 13, 2008, the DJ I A surg ed upwa rd by 936 points, the larg est one-da y g ain (a pproxi mately

11%) since the 1930s. Mark L andler , Sto c k Ma rk e ts R all yW or ldw ide– B iggest Interve ntion Since ‘30s , N.Y. Times, Oc t. 14, 2008, at A1. The D J I A closed at 9,387.61. Id . at B 1. Even duringthe mid-point of the downwa rd st ock mar

ket dec line, commentators r ecog nized the detrimental ef

fe ct upon pension funds’ inve stments. Mary Wil liams W alsh, Ma rk

e t Tu rm oil Le av es Bi g Pe ns ion Fu nd

s Fa lli ng Sh or t , N.Y . T ime s, Ap r. 17 , 2 00 8, a t C3 (e xpla ini ngthat turm oil in t he fi na nc ia l ma rk e ts r e su lts in a dv e rs e c on se qu e nc e s f ro m e qu ity

inv e stm e nts and

int e re st r a te swing s). The c urre nt crisis has adve rsely aff ecte d multi-employ er pe nsion plans for unionized worke rs such as the 1974 Plan. K ris Maher , Unions Seek Pension Prot ections i n Bailout , Wa ll St

. J., Se pt. 25 , 2 008, at A6 (“M any of the se pe ns ion

fu nd s a ssume d a

7% annua l r e tur

n o n th e ir investments, but have lost money instead.” F or example, the Tea mster’s Central S tates F und, pr e vio us ly va lue d at $24 bil lio n, los t $3 billi on in as se ts dur ing the fi rs t si x mont

hs of 20 08 .) ; see also Craig Kar

min et al., Cal

pe rs M ay Lift Con tri bu tio n R ate , Wall S t. J ., Oct. 23, 2008, at A3 (n oti ngthat th a t th e a sse ts o f t he Ca lif or nia Pub lic Em

plo y e e s’ R eti rem ent Sy ste m, c omm on ly known as Calper s, “have declined by more than 20% , or at least $48 billion, from the end of J une throug h Oct. 10”)

. Given the a

bove, one note s that investment losses will have a di rec t and substantial impact on the potential withdraw al l iability of any of t he 1974 Plan’s contributing employ ers. Such impac t on withdrawa l liability will be far g reater than any potential loss ( or g ain) resulting s o l el y from e mpl oy e e s’ c on tin

ue d w or k d ur inga c ha pte r 1 1 a dmi nis tr a tiv e pe ri od

. As imp or tant a s e mpl oy e e s’ work e ffor

ts may be, for administrative expense ana ly sis, thos e ef forts pale in comparison to the va g ari e s o f t

he mark e t in ve stm e nt r e su lts

.

- 25- Acc ording ly , we c onclu d e, as a matter of law, that claims for withdra wal liability

lack the requisite ca

usal relationship t o the work pe rfor med by the Debtor s’ employ ees f or the c laim to be t re at ed as an administrative e x pense. In light of this conc lusion, we nee d not consider the 1974 Plan’ s ass ert io n th a t it

sh ou ld b e pe rm itt e d to pr e se nt a dd iti on a l f a c tua l e vid e nc e in s up po rt of its calc ulation of its administ rative c laim. I ndeed, ba sed upon our r eview of the entir e record, w e believe that the 1974 Plan w as g iven an adequate opportunity to attempt to prove that its withdrawa l lia bil ity c la im is ent itl e d to a dmi nis tr a tiv e status . Re g ard le ss o f h owthe e mpl oy e r’ s p ro po rt ion a te sh are of a pla n’ s unf un de d v e ste d b e ne fi ts m ay be de te rm ine d o r ho w th e wi thd ra wa l li a bil ity is allocate d betwee n pre- and postpetition periods, the calculation will alway s be based upon fac tors that are not direc tly related t o the allege d benef it to the debtor’s estate . Consequently , the re sulting claim (a nd perha ps any claim) for

withdrawa l liabilit y

has onl y a tenuous connection to the po stp e tit ion

wo rk of the De bto rs ’ em

plo y e e s and c ann ot b e de e me d to have dir e c tly and su bs tanti a lly benef itted the estate.Reading wa s d e c ide d und e r § 64 a (1 ) o f t he former Bank

ru ptc y Ac t, t he pr e de c e sso r t o 17 § 503(b). Howeve r, beca

use the two statutory sections ar e similar, cour ts have c onsistently

applied the re asoning of Reading to ca s es u n d er the Ba

nkruptcy Code. See, e .g. , Ala. Surface Mining Comm’n v. N.P. M

ining Co. (I

n re N.P. Mining Co.) , 963 F.2d 1449, 1455- 56 (11th Cir. 1992).

- 26- C. The Re ad

ing v . Brown Exc e pt ion
. F ina lly , th e 19 74 Plan a sse rt s th a t th e “ be ne fi t to the est ate ” sta nd ard do e s n ot a

pp ly to i ts claim beca

use withdrawa l liability is a statutorily -imposed obligation that was incidenta l t o the postpetition operation of the De b t o rs ’ businesses. To support this asser tion, the 1974 Plan relies upon Re ad

ing Co. v . B ro wn , 391 U.S. 471, 88 S. Ct . 1759 (1968), f or the princ iple that a cla im may be a ff or de d a dmi nis tr a tiv e pr ior ity e ve n if it d oe s n ot b e ne fi t or

he lp pr e se rv e a de bto r’ s e state , s o long a s the claim re lates to ce rtain aspe cts of the e state’s postpetition operations.
The de btor in Reading

wa s und e r t

he pr ote c tion of a bankr

up tc y re c e ive rs hip wh e n it s

17 pr ima ry a sse t, a n e ig ht- sto ry

ind us tr ia l bu ild ing , w a s to ta ll y dest ro y e d b y fi re . T he fi re sp re a d to adjoining pr operties a

nd damag ed seve ral neig hboring businesses. After the debtor was a djudicated bankrupt a

nd the re ceive r was appointed trustee, the owner s of the adjoining proper ties filed more than $3.5 million i n claims ag ainst the debtor’s bankruptc y estate. The Reading Company , one of the fire loss claimants, asserte d that its claim was entitled to administrative priority beca use the fire

was c aused by

the neg lige nce of

the re ceive r in operating the debtor’s business. The trustee objec ted to a llo wa nc e of the c la im a s an a dmi nis tr a tiv e e xpe ns e on the g ro un d th a t pa

y me nt o f t he fi re los s claim would conf

er no be nefit on the de btor’s bankr uptcy estate. The Supreme Court held that the fire damage cl ai m , whi ch re sulted from the postpetition

ne g lig e nc e of

the re c e ive r, wa s an “ a c tua l and ne c e ssa ry c os t” of op e ra

tin g the de bto r’ s b us ine ss, even though pay

ment of t he claim provided no benef it to the bankruptc y

estate. The Court expl ained that “a c tua l and ne c e ssa

ry c os ts” sh ou ld “i nc lud e c os ts or din ari ly inc ide nt t o o pe ra

tio n o f a bu sin e ss, and not be limit ed to costs without which re habilitation would be impossibl e.” Reading , 391 U. S. at 483. I n rea ching this conclusion, t he C ourt cited “one i mportant, and her e dec isive” objec tive of the bankruptcy

laws: “fa irness to all persons having c laims ag ainst an insolvent.” Id . at 477. The Court noted that by

post p o n i n g t h eir c laims during a Chapter XI

arr ang ement, the de btor’s prepe tition uns ecur ed cr editors could hope to be nefit from a successful re habilitation of the debtor

and “ e ve ntu a lly

re c ov e r f ro m th e de bto r e ith e r i n f ull or in l arg e r pr op ortiontha

n th e y wo uld in- 27-

immediate bankr

uptcy .” Id . at 478. The f

ire loss claimant, by contra st, “did not mere ly suffe r injury at the hands of

an insolvent business: it had an insolvent business thrust upon it by operation of law.” Id . T he Court

re a so ne d th a t: in consideringwhet h er those injured by the oper ation of the business duringan arr ang e me nt s ho uld

sh are e qu a lly

wi th, or re c ov e r a he a d o f, tho se fo r who se be ne fi t the bus iness is car

ried on, the l atter seems more natural and just. Ex isting cr editors are , to be sure, in a dilemma not of their own making , but the re is no obvious reason why they should be allowed to attempt to escape that dilemma at the risk of imposing it on others equally

innocent.

Id . at 482-83.

I nap p l y i n g Reading , courts have actively limit ed the use of the e x ception to claims for tort damag es, or case s involving intentional misconduc t by the trustee or debtor- in-possession. Bene ke Co. v. Econ. Lodging Sys., Inc . ( In re Ec on. Lodging Sys., Inc.) , 234 B.R. 691, 698 (B .A.P. 6th Ci r. 19 99 ); see also Abe rcrombie v . Hayde n Corp. ( In re Abe rcrombie) , 13 9 F.3d 755, 758 (9th Cir. 1 9 98) (“The Reading e xc e p ti o n o p e r a te s to d e te r th e tr u s te e f r o m in ju r in g th ir d p arti e s .”). F or example, in Cha rle

sb an k Lau nd ry , t h e Fi rst Circuit gr anted a dminist rative pr iority to a claim for civil compensatory

damag es stemming f

rom the debtor’ s operation of its laundry fac ility in violation of zoning law s and a te mporary injunction. Spunt v. C

harlesbank L aundry, Inc. ( In re Charlesbank Laundry, Inc.) , 755 F.2d 200 ( 1st Cir. 1985). The F irst Circuit ex plained:

We s e e no re a so n w hy the c la im of pla int if fs in thi s c a se do e s n ot f

a ll w ith in both the letter and the spirit of Reading . The same fairne ss principle favors plaintiffs he re , w ho se pr e mis e s, liv e s, or bu sin e sse s w e re a dv e rs e ly a ff e c te d b y [the de bto r’ s] continuing c onduct in violation of the temporar y injunction.

Id . at 20 2. I n fa c t, the c ourt su g g e ste d th a t th e fa c ts b e fo re it p re se nte d a po te nti a lly

str on g e r c a se for pr iority

than those in Reading , beca use the de btor de lib e ra te ly operated its business in vi olation of the zon ing laws and inj un c tio n. “ I f fa ir ne ss dic tate s that a tor

t c la im b a se d o n n e g lig e nc e sh ou ld be paid a head of pre- reor g anization claims, t h en . . . an intentional ac t which violates the lawand damag es others should be so tre ated.” Id . at 203. Simil arly , in Al Copeland Enterprises , th e F if th Circuit gr anted a dminist rative e x pense pr iority to an awa rd of interest on sales tax es wrongf ully and deliberately withheld by

a cha pter 11 trustee

. Al Copeland Enters., Inc. v. Tex. ( In re Al Copeland- 28-

Enters., Inc.) , 991 F.2d 233, 238 ( 5 t h Cir. 1993). Fina lly , in a slight e x tension of the Reading exception, the Eleventh Circuit in N.P. Mining allowed a

n administrative expense cla im for punitive civil penalties asse ssed as a result of postpetition environmental violations comm i t t ed during the operation of the cha

p t er 11 debtor’s strip mining business. Ala. Surface Mining Comm’n v . N.P. Mining Co. (

In re N.P. Mining Co.) , 963 F .2 d 1 44 9, 14 55 -5 6 ( 11 th C ir . 1 99 2) (a c kn ow le dg ingthat,

u n l i k e c o mp en s at o ry

d am age s , t h e p en al t i es wo u l d n o tb e u s ed t o re p ai r th e e n v i ro n m en t al d am age or to p ro tect the public’ s health, but holding that under Reading and 28 U.S.C. § 959(b) pe nalties assessed f

or postpetition mini ng operat i o n s ar e “costs ordina rily incident to the oper ation of a bu sin e ss” and

are e nti tle d to a dmi nis tr a tiv e pr ior ity ); bu t se e Pe nn . De

pt. of E nv tl. Re s. v . Tr i- Sta te Clini cal Labs., Inc ., 178 F.3d 685 (3d. C ir. 1999) (punitive c riminal fines for illega lly disposing of infec tious waste postpetition are not entitled to administrative priority ). To our knowledg e, the Six th Circuit ha s g rante d administrative priority under the Reading exception on only

one occ asion. See Lancaste r v. Tenn. ( In re W all Tube & Metal Prods. Co.) , 831 F.2d 118 (6th Cir. 1987). I n W all Tube , the S ix th Circuit deter mined that response costs incurre d by the State of

Te nn e sse e a s a re su lt of ha zar do us wa ste s st or e d at th e de bto r’ s ma nu fa c tur ingsit e
wer e entitled to administrative priority . The c ourt explaine d t h at p ri or Supreme Court de cisions

“ have c re a te d a

sp e c ia l e mph a sis on

the imp or

tanc e of c omp lying wi th laws that pro te c t the pu bli c h ea l t h and safety .” Id

. at 1 2 3 (c i t i n g M id la n ti c Na t’ l B a n k

v
. N. J

. D e p t. o f E n v tl

. P r o te c tion , 474 U.S. 494, 106 S. C t. 755 (1986) and Ohio v. Kovacs , 469 U.S. 274, 105 S. C t. 705 (1985)). In W all Tube , it was undisputed that the hazardous substances on the debtor’s proper ty could have c aused

as m any as fifte en diffe rent he alth problems, ra ng ing f rom loss of consciousness to dea th, to any one wh o came int o co nta c t with the m. Wh e n th e de bto r, and late r i ts tru ste e , d id n oth ingto r e me dy the se he a lthha zar ds , th e State of Te nn e sse e wa s e nti tle d und e r it s ow n s tate laws and CER CL A t o “ex p en d funds t o assess the g ravity of the e nvironmental hazard.” Id . at 12 4. Al tho ug h th e se expenses produce d no corr es p o n d i n g benef it to the estate, the c ourt held that the e x penses we re “ac tual and nec essar

y , both to preser

ve the estate i n require d compliance with state l aw and to protect the hea lth and safe ty

of a pote ntially

endang ere d public.” Id

. At least one judg e on the Six th Circuit has sugg ested that the reasoningin W all Tube sh ou ld be applied be y ond the context of environmental c ases . See P ension Bene fit Guar. Cor

p. v. Sunarhauserman, Inc. (

In re Sunarhauserman, Inc .) , 1 2 6 F

. 3 d 8 1 1 , 8 2 1 ( 6 t h C i r
. 1 9 9 7 ) ( K e n n e dy,The majority ’s holding in Sunarhauserman appea rs to be in line with a number of ca ses 18 declining to apply

the Reading

exception to claims stemming from pr epetition contra cts. See, e .g , In re W einschne ider , 395 F.3d 401 ( 7th Cir. 2005) (dec lining to extend the Reading exception to an a tto rn e y ’s c la im f

or br e a c h o f a

c ov e na nt n ot t o s ue ); Total Minat ome Corp. v. Jack /W ade Drilling, Inc. ( In re J ack/W ade Drilling, I

n c.) , 258 F.3d 385 ( 5th Cir. 2001) (dec lining to extend exception to n on -d e bto r l iti g ant’ s c la im f or a tto rn e y fe e s, c os ts an d expe ns e s awa rd e d to it a s p re va ili ngpa

rt y in c ha pte r 7 tr us te e ’s po stp e tit ion

su it f or brea ch of pr e pe tit ion

c on tr a c t) ; I

n r e Ab e rc ro mb ie , 139 F .3 d 7 55 (d e nyinga dmi nis tr a tiv e pr ior ity to c la im f

or a tto rn ey fees awar de d p os tpe tit ion a g a ins t chapte r 11 debtor in r eal e state contra ct ac tion init iated pre petition).

- 29- J., d iss e nti ng ). Th e dis se nti ng jud g e op ine d that bo th t he “ no rm a l” and

“ no n- no rm a l” c omp on e nts of a de bto r’ s p os tpe tit ion

min imum f

un din g c on tr ibutio ns un de r E RI SA s ho uld be e nti tle d to administrative priority . J udg e Ke nnedy rea soned th at , l i k e environmenta l response c osts under CERCL A, t he “costs of comply ing with a regulatory scheme [i n this case, ERI SA] are administrative expenses, reg ardle ss of whethe r they ‘bene fit the estate’ in a pra ctical wa y .” Id

. at 8 2 1

. J u d ge Kenne dy noted t hat “[ a]lthough protection of t he environment is an important g oal, so is protection of pension funds.” Id . at 82 2. Ac c or din g ly , she c on c lud e d th a t “ [i]f c omp lia nc e wi th a g ive n s tatut e
or re g ulatio n is ne c e ssa

ry to op e rate a s a bu sin e ss, the n the c os ts of su c h c omp lia nce n e c e ssa

ri ly should be an a dminist rative e x pense.” Id

. The Sunarhauserman ma jori ty did no t di re c tly

a dd re ss W all Tube or Judge Ke nnedy ’s compar ison of ERI SA minim um funding contributions to response costs under CERCL A. Instead, the cour t ge nera lly

found the Reading exception inapplicable based on the fact that the non-nor mal component of PBGC’s claim related to liabiliti es that ar ose pre petition. Id . at 81 7. Th e ma jor ity

e xpla ine d that “

Reading does not eliminate the re quirement that a debt ar ise post-petition in order to be ac corde d administrative expense priority .” Id . Be cause t h e n o n -n o rmal portion of PBG C’s

c la im r e la te d to pr e pe tit ion lia bil ities, the ma

jor ity he ld t hat Reading

“would not justify

g ranting administrative priority

to the entirety

of Pension Be nefit’s c laim.” Id

. 18

I n th e pr e se nt a

pp e a l, th ere is no qu e sti on that th e 19 74 Plan’ s w ith dr awa l li a bil ity c la im

aro s e p o s t p etition and partially relates to postpetition work by the Debtor ’s employ ees. See CPT Holdings, Inc. v. Indus. &Allied Employee s Union Pension Plan, Local 73 , 16 2 F .3 d 40 5, 40 9 ( 6th Cir. 1998). Acc ording ly , the g rounds on whic h the Sunarhauserman ma jor ity de c lin e d to a

pp ly Reading are not releva

nt in this instance. N ever t h el es s , we find that the 1974 Plan’s withdraw al liability claim is not the ty

pe of claim t o which the narrow Reading exception applies. Unlike otherI n th e B ank ru ptc y Ab us e Pr e ve nti on

and Con sume r Prote c tio n A c t of 20 05 , Co ng re ss 19 demonstrated its ability

to give statutory

liabiliti es administrative status. See 11 U.S.C. § 503(b)(9) (g rantingadministrative priority to a par ticular c ateg ory

of re clamation cla ims).

- 30- case s that have a

pplied the exception, the withdrawa l liability claim does not ste m from tortious or deliberate misconduct by the Debtor s. As discussed pre viously , withdrawa l from multiemploy er pen s io np la

n s is p e r mi tt e d , an d

e v e nan ti c ip a te d , u n d e r

E RI SA

. T h e a s s e s s me n t o f w ithdr awa l liability ag ainst an employ er se eks to disco u r a g e w it h d r a w a ls f r o m m u ltiemploy er pe nsion plans and, when they

occur , to miti g ate the ne g ative imp ac t of the withdra wal on employ ees a

nd other participating e mploy ers. Withdrawa l liabilit y is not a penalty

for wrong ful conduct. The De btors

wer e within their rig hts when they terminated operations and w ithdrew fr om the 1974 Plan. Th e re fo re, w e fi nd

tha t th e re su lti ngwi thd

ra wa l li a bil ity is n ot e nti tle d to a dmi nis tr a tiv e pr ior ity under Reading

and its prog eny
. We likewise dec line to ext end the Reading e xce pti on to t he 19 74 Pla

n’ s c la im o n th e ba sis t hat, like the envir onmental claims in W all Tube , c o mp li an c e w it h E RI SA , in c lu d in g pay

ment of withd ra wa l l i ability , is a cost of ope ratingthe debtor’ s business that should be treate d as an

a dmi nis tr a tiv e e xpe ns e . Alth ou g h p ro te c tio n o f p e ns ion fu nd s is an unq

ue sti on a bly imp or tant g oa l, we do not believe that the spec ial conce rn for the public hea lth and safe ty prese nt in W

all Tube and the other e nvironmental cases i s implicated in the pre sent appe al. See, e .g. , In re Sunarhauserm an , 184 B.R. 273, 276-77 (Ba nkr. N.D. O hio 1995), aff’d , 126 F.3d 881 ( 6th Cir. 1997) (distinguishing minimum funding require ment under ERI SA from environme ntal regulations designe d to p r o tect the public health and sa fety

). Any extension of the Reading e xce pti on to s tatut or y wi thd ra wa l li a bil ity is b e st u nd e rt a ke n b y

the Un ite d St a te s Co ur

t of Ap pe a ls fo r the Sixth Cir c uit , the Sup re me Court , or Con g re ss. 19

V. CO NC LU SION
For the fore g oing r easons, we conclude that the 1974 Plan failed to establish, as a matter of law, that its wi thd

ra wa l lia bil ity c la im “ dir e c tly

and su bs tanti a lly” be ne fi tte d th e De bto rs ’ e state s. Fur ther, be cause the withdraw al liability claim does not stem from tort damag es or int en t ional misconduct on the par

t of the De btors, the Reading exception does not apply and the c laim is not- 31-

entitled to administrative priority on that basis. Acc ording ly , the bankruptcy court’s disallowa

nce of the 1974 Plan’s c laim is AFF I RMED.