Opinion ID: 602355
Heading Depth: 2
Heading Rank: 2

Heading: The Orders for Interim Funding of the J & L Hourly Plan

Text: 8 During the reorganization proceedings, the J & L Hourly Plan was continuing to pay benefits to its participants, though it was not receiving postpetition contributions from the debtors. In May 1991, the debtors estimated that the Plan's liquid assets would be exhausted by the end of July 1991. Seeking to avoid a mandatory termination of the plan under § 4042(a) of ERISA, 29 U.S.C. § 1342(a) (1988 & Supp. I 1989), and to preserve the tentative settlement with PBGC, the debtors sought authorization from the bankruptcy court for the immediate payment by LTV to the J & L Hourly Plan of an amount equal to the benefit payments expected to be due under such plan for July, August and September, 1991, but not exceeding $40 million. (Application in Support of Order Authorizing Payments to J & L Hourly Pension Plan, dated May 13, 1991, at 9.) Over the objections of certain creditor committees, the bankruptcy court entered an order in June 1991 authorizing the immediate payment by LTV Steel to the J & L Hourly Plan of $27 million, representing two months of benefit payments. The Official Committee of Unsecured Creditors of LTV Steel Company, Inc. (Steel Committee), and Cold Spring Management, Inc., a creditor of Aerospace and then-chair of an unofficial Aerospace creditors' committee, appealed that order. Their appeals were subsequently withdrawn pursuant to an accord in which the two appellants agreed not to oppose any application by the debtors to fund the J & L Hourly Plan through November 30, 1991, and the debtors agreed not to seek authorization for any additional funding beyond that date without the consent of the two appellants. 9 On October 30, 1991, the Steel Committee, having also reached a tentative settlement with PBGC, sought an order authorizing the immediate payment by LTV to the J & L Hourly Plan of an amount equal to three months' benefits and, subject to the occurrence of certain events, any additional monthly payments necessary thereafter to provide sufficient funding through June 1992. Following a hearing, the bankruptcy court issued an order on November 5, 1991 (November 1991 Order) granting the request, finding that additional payments to the J & L Hourly Plan were necessary to the process of developing a plan of reorganization for The LTV Corporation and its affiliates. Accordingly, the November 1991 Order authorized and directed LTV Steel (a) to make an immediate payment to the J & L Hourly Plan sufficient to fund three months' benefits, providing a Three-Month Cushion, and (b) thereafter to make monthly contributions to the Plan from December 1991 through September 1992 of amounts sufficient to fund benefits in each month and thereby replenish the Three-Month Cushion. November 1991 Order at 2. The order also provided, inter alia, that these payments would constitute a dollar-for-dollar offset against any ultimate distributions to the J & L Hourly Plan or the other restored plans, or to PBGC with respect to any of the plans pursuant to a plan of reorganization. 10 The Aerospace Committee timely appealed from the November 1991 Order. It did not, however, request a stay pending appeal. Its appeal remained pending until July 7, 1992. 11 In the meantime, LTV Steel made the required payments to the J & L Hourly Plan; by September 30, 1992, its payments totaled approximately $163 million. All of these funds have been paid out as pension benefits to the Plan's participants. 12 In addition, after lengthy negotiations, LTV Steel and the United Steelworkers of America reached an agreement governing their continued relationship (Collective Bargaining Agreement). A key provision of this agreement is LTV Steel's commitment to continue the funding of the J & L Hourly Pension Plan through the earlier of the effective date of the Plan of Reorganization or September 5, 1993. In an order dated August 12, 1992 (August 1992 Order), the bankruptcy court approved the Collective Bargaining Agreement, including LTV Steel's commitment to continue funding the J & L Hourly Plan. After the September 1992 expiration of the funding requirement contained in the November 1991 Order, LTV Steel continued to fund the Plan pursuant to the August 1992 Order. The Aerospace Committee neither objected to nor appealed from the August 1992 Order.