An employer's chapter 11 filing has a number of immediate effects on all of its creditors, as well as certain longer-term ramifications specific to retirees and Union employees:
- Your former employer can seek court approval to terminate or modify your pension plan.
- If your defined benefit pension plan is terminated and is fully funded (a "voluntary termination"), your employer will use plan assets to purchase an annuity to pay your benefits.
- If your pension plan is terminated by an employer in bankruptcy (a "distress termination") or by the PBGC (an "involuntary termination") and is underfunded, the PBGC will take over the plan's assets and liabilities. Your benefits will be paid by the PBGC, not by your employer, and are subject to a maximum of $4,500 per month for plans terminated in 2011.
What is Section 1114?
Section 1114 is payment of insurance benefits to retired employees
Read more about Section 1114 here...