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The Benefit of Whose Bargain? Courts Grapple with Administrative Expense Priority for Postpetition Withdrawal Liability Claims
September 2012
Two circuit level court decisions have directly addressed whether the postpetition portion of the liability incurred by a debtor for withdrawing from a multi employer benefit plan (i.e., withdrawal liability) is entitled in a bankruptcy case to payment as an administrative expense with priority over other general unsecured creditors. In United Mine Workers of America 1974 Plan and Trust v. Lexington Coal Co., LLC (In re HNRC Dissolution Co.), the Sixth Circuit Bankruptcy Appellate Panel held that the postpetition portion of the debtors’ withdrawal liability was not entitled to administrative expense priority because it did not provide a direct and substantial benefit to the debtors’ estates. More recently, however, in In re Marcal Paper Mills, Inc., the Third Circuit Court of Appeals held that the postpetition portion of withdrawal liability is entitled to payment as an administrative expense of the bankruptcy estate because the liability was incurred in return for and on account of the employee’s postpetition services.
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The US Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) have overhauled Form PF and private fund managers have until March 12, 2025, to begin reporting on the new Form. The changes to the reporting requirements mandated by the amendments to the Form (“Form PF Amendments”) will require substantial preparation by many managers.[1]
Alerts
The US Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) have overhauled Form PF and private fund managers have until March 12, 2025, to begin reporting on the new Form. The changes to the reporting requirements mandated by the amendments to the Form (“Form PF Amendments”) will require substantial preparation by many managers.[1]