In re Marcal Paper Mills, Inc.

Citation:
United States Court of Appeals for the Third Circuit, Case No. No. 09-4574, In re Marcal Paper Mills, Inc., June 16, 2011
Tag(s):
Ruling:
United States Court of Appeals for the Third Circuit held that under the Employee Retirement Income Security Act (“ERISA”), as amended by the Multiemployer Pension Plan Amendments Act (“MPPAA”), the portion of withdrawal liability that is attributable to the post-petition time period constitutes an administrative expense entitled to priority under the Bankruptcy Code.
Procedural context:
The United States District Court for the District of New Jersey reversed a bankruptcy court decision reclassifying an administrative claim as a general unsecured claim.
Facts:
The debtor employed truck drivers who were members of Teamsters Union Local 560. Local 560 was the collective bargaining representative for those employees and entered into a series of collective bargaining agreements (“CBAs”). As part of the CBAs, the debtor was required to participate in the Trucking Employees of North Jersey Welfare/Pension Fund (“TENJ Pension Fund”). During the course of the bankruptcy case, the debtor sold its assets to an entity that did not continue to employee Local 560 drivers. The TENJ Pension Fund determined that the debtor had made a “complete withdrawal” from the pension fund within the meaning of ERISA, as amended by the MPPAA. The TENJ Pension Fund assessed Marcal with $5,890,128 in total withdrawal liability. On July 29, 2008, the TENJ Pension Fund filed a claim for the entire amount of withdrawal liability as an administrative expense. The debtor objected to the TENJ Pension Fund’s claim that the withdrawal liability be classified as an administrative expense and filed a motion to reclassify it as a general unsecured claim. In response, the TENJ Pension Fund altered its claim and only sought administrative priority for that portion of the withdrawal liability attributable to postpetition services provided by Local 560 employees to the debtor.
Judge(s):
Sloviter, Hardiman, and Jones

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