Tristan Axelrod Pens Article on COVID Pension Bailout

In an article for Norton Journal of Bankruptcy Law and Practice, associate Tristan Axelrod examines recent pension reform legislation and rulemaking implemented pursuant to the stimulus bill passed by Congress in January of this year.

The article, published in the December edition of the Thomson Reuters publication, is entitled “The Angel in the Details: COVID Pension Bailout Places Pension Solvency in PBGC Control, with Implications for Chapter 11.”

The article notes that the American Rescue Plan of 2021 (ARPA) provided a multibillion-dollar bailout of several of the nation’s largest pension plans and, indirectly, their insurer, the Pension Benefit Guaranty Corporation (PBGC). It also grants administrative control over a special financial assistance (SFA) program to the PBGC, including extensive rule-making authority over matters crucial to employer restructuring and insolvency planning. The PBGC published its rules and guidance earlier this year, with significant implications for pension plans, employers, beneficiaries, and restructuring professionals.

“The SFA funds awarded through ARPA will fund some multiemployer plans for years beyond previously projected insolvency dates, thus preserving the livelihoods of millions of Americans,” Axelrod wrote. “The law also, however, highlights the PBGC’s authority and importance as a regulatory body. Previously a bit player in most corporate insolvencies involving multiemployer pension plan contributing employers, the PBGC will now be, in many cases, a mandatory consent party in any resolution of pension liability arising from a contributing employer’s insolvency.

“Moreover, the PBGC will have a continuing role in determining how much money multiemployer plans can receive from the federal government, how that money can be invested, and what effect it has on the liability charged to withdrawing employers and controlled group members.”