- Case Type:
- Case Status:
- 20-3384 (7th Circuit, Jul 26,2021) Published
- The priority cap for employee benefit plan claims in 11 U.S.C. § 507(a)(5) is determined on a plan-by-plan basis, even if the same union is the sponsor for two or more plans. Section 507(a)(5)'s statutory cap applies to "an employee benefit plan," i.e., each plan, not to all employee benefit plans in aggregate. Each plan's priority cap thus is determined without reference to the allowed priority amounts of other plans' claims.
- Procedural context:
- The debtor appealed an order of the bankruptcy court that granted priority status to the claims of three separate employee benefit funds operated under a single collective bargaining agreement. The district court affirmed the bankruptcy court's decision. The debtor appealed.
- Algozine Masonry Restoration, Inc., employed members of a union. Under the collective bargaining agreement with the union, Algozine was required to submit contributions to three employee benefit funds--the Welfare Fund, the Pension Fund and the Annuity Fund (collectively, the "Funds"). Algozine fell behind on its contribution obligations to the employee benefit funds before filing its Chapter 11 petition. The Funds each filed a separate proof of claim for amounts due from Algozine. After amending their proofs of claim, the Welfare Fund asserted a claim entitled to priority treatment under 11 U.S.C. § 507(a)(5) for $21,334.30; the Pension Fund asserted a priority claim for $18,453.40, and the Annuity Fund asserted a priority claim was for $11,607.16. Collectively, the Funds' claims total $51,394.86. Algozine objected and argued that the Funds' claims should be allowed in a total amount of $5,556.34. Algozine argued that the Funds' claims should be aggregated and then allowed as a priority claim under 11 U.S.C. § 507(a)(5). The Funds disagreed.
- WOOD, ST. EVE, and KIRSCH
3335 in the system
1 Being Processed