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September 06, 2007 at 01:06 PM
Little information is available about what happens to employee benefit plans when the employers file for bankruptcy court protection.
Barbara Bovbjerg, a director at the U.S. Government Accountability Office, delivers that assessment in a report on the factors affecting the treatment of pension and health benefits in Chapter 11 bankruptcy reorganization proceedings.
Bovbjerg prepared the report at the request of members of Congress who wanted to know how laws such as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and the Pension Protection Act of 2006 have been affected the fate of benefit plans at employers that go through the Chapter 11 restructuring process.
Because federal agencies and federal laws rarely guarantee employees’ access to defined contribution retirement plans or health benefits for current employees, statistics on the fate of those types of plans at reorganizing companies are especially scarce, Bovbjerg writes.
“Most of the 115 employers we reviewed did not offer benefits that specifically needed court approval to change,” Bovbjerg writes.
Only 20 employers studied had defined benefit pension plans, which are protected by federal law, and 28 had employees in plans covered by collective bargaining agreements, Bovbjerg writes.
