Opinion ID: 602355
Heading Depth: 2
Heading Rank: 1

Heading: Proposed Settlement of LTV Steel's Pension Fund Liabilities

Text: 4 At the time of the Chapter 11 filings, LTV Steel was the sponsor of four pension plans administered by LTV, including the Jones & Laughlin Hourly Pension Plan (J & L Hourly Plan or Plan). The Pension Benefit Guaranty Corporation (PBGC) at first terminated these plans and took over their assets and liabilities. It subsequently reinstated the J & L Hourly Plan and two others, see generally Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633, 640-44, 110 S.Ct. 2668, 2672-75, 110 L.Ed.2d 579 (1990), returning responsibility for their administration and funding to LTV, see generally In re Chateaugay Corp., 973 F.2d 141, 142 (2d Cir.1992). 5 Since both Aerospace and LTV Steel are subsidiaries of LTV, Aerospace is a member of LTV Steel's controlled group for purposes of the Employee Retirement Income Security Act (ERISA) and is jointly and severally liable with LTV and other LTV subsidiaries for claims made against the LTV Steel pension plans upon termination. See 29 U.S.C. § 1362(a) (1988 & Supp. I 1989); In re Chateaugay Corp., 973 F.2d at 142. Accordingly, PBGC filed proofs of claim against Aerospace, as well as against LTV Steel and the remaining controlled group members, for the amount by which the terminated plan and the three restored plans were underfunded--a total of more than $3 billion. With respect to the restored pension plans, the PBGC claims are, in effect, contingent claims to be pressed if one or more of those plans terminates prior to the confirmation of a reorganization plan. 6 Any reorganization of the debtors' estates will have to resolve these claims in a manner acceptable to PBGC. To this end, the debtors filed a proposed joint plan of reorganization in May 1991, the catalyst for which was a tentative settlement between the debtors and PBGC with respect to the pension obligations. The debtors' Disclosure Statement Pursuant to § 1125 of the Bankruptcy Code, dated May 1, 1991, described the proposed plan as dependent to a great extent upon [the debtors'] reaching final agreement with the PBGC substantially in accordance with the terms of the tentative Pension Settlement, and stated that one of the chief goals of the tentative settlement was to have the debtors provide sufficient funds to the plans to ensure that beneficiaries of the restored pension plans will be paid in full. 7