Petition for Writ of Certiorari — Adams v. Pension Benefit Guaranty Corp (No. 06-145)

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Supreme Dutt, U8.

06-145 JUL 25.2006

NO-OFFIGE OF THE CLERIC

In the

Supreme Court of the United States

ALLEN D. ADAMS, Il, et al.,

Petitioners,

PENSION BENEFIT GUARANTY CORPORATION

and PICHIN CORPORATION,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the D.C. Circuit

PETITION FOR WRIT OF CERTIORARI

Davip S. DEssEN

Counsel of Record

DessEN, Moses & RossitTo

600 Easton Roap

WILLow Grove, PA 19090

. (215) 496-2902

(215) 564-2879 Fax

Counsel for Petitioners

Becker Gallagher Legal Publishing, Inc. 800.890.5001

QUESTION PRESENTED

Does the Pension Benefit Guaranty Corporation

(hereinafter referred to as “PBGC’) have the authority to

waive or compromise the liability imposed on the sponsor

of a defined benefit pension plan by § 1362 of the

Employee Retirement Income Security Act?

iil

PARTIES TO THE PROCEEDINGS

In addition to the parties named in the caption, the

following individuals were appellants in the Court of

Appeals for the District of Columbia Circuit and are

petitioners in this Court:

Richard P. Barthelemy

Eugene H. Frank

Peter W. McCue III

Arthur L. Melnick

Gerald N. Pilot

Walter P. Sullivan

ill

TABLE OF CONTENTS

PAGE

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PARTIES TO THE PROCEEDINGS .........0.ssccsesscssssoveccseeee il

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TABLE OF AUTHORITIES ...........-..::-+ abiedauabusiaiens v

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STATUTORY PROVISIONS INVOLVED ...................0 I

EF CET Ge Ee Sey iattsienicttinttvicpncirnnieinscion 2

Bic STE ciciicsicsvasahevinerbiaincternidesecimibeommmonsimnunitons 2

B. The Termination of the TWA Pension Plans........... 4

I FR a Be ersccsnses aprsnsccinicntcatnsinncnienncaiatines 5

D Denes tae a, 7

REASONS FOR GRANTING THE PETITION ................ 8

I. The Structure of the Pension Guaranty System ........ 9

Pe I RII oi vase cciectrnecnnserocinaceinne 10

B. The Trastkstinn ProvisiOs ...0.0<ccccccccccocceceoccsecs. 14

Il. The PBGC Cannot Change the Amount of the

Termination Liability Fixed by Congress ............. 15

Ill. The Position of the PBGC Endangers the

Existence of the Pension Guaranty System

Se re icin ois en ca cssintaenesvtacsarintestcceatveess 17

SE IT patch fiksncencbondriviesconvesancesnusbeasrepeeseormanoas 19

APPENDIX

Order Denying Reconsideration...................sssee0e App. |

Judgment Order Affirming the Order of the

INE Nixie cucdienssadesitunsacaatodaabuesestadecens App. 3

Opinion of the District Court ..............0-c.ccscoresonee- App. 5

Re i 6 Ie ose tesiners cave sinscshccaenddantiiandsnieiohns App. 20

Ee ORE isis craisticeciecseuestnactintarntidaa App. 26

BO Wiha BADE ccisinitininiiccuniunnannee App. 40

i I iiss codencienscsousavadcsariaacieniiceea App. 48

MOE CUE i i App. 53

- Y

TABLE OF AUTHORITIES

CASES:

Airline Pilots Ass’n, International v. Pension Benefit

Guaranty Corp.,

193 F.Supp 2d. 209 (D.D.C. 2002) ....cccsrrcssevoresesecsecveres 5

Allied Pilots Ass’n. v. Pension Benefit Guaranty Corp.,

Fe ee A aes Se BOOED cctentsniverisnacscctinneniitins 6,7,8

Nachman Corp. v. PBGC, 7

Be Cs SI IE canis sizeceenctosasesnintesevansapeictiasienisiiin 9,11

Pierce v. Underwood,

ae ie Ge IE eis csencicnwscubenevadsivasicceneniahenseinnitvicwnninaws 16

U.S. v. Monsanto,

Re IE siicisciiicisarecespiiniinnastivecuniesiineiotenetioges 16

STATUTES AND RULES:

Be is NM itch de baactindbestlancsne ovivsidvictsrenienicnedanorena ecueansducin 1

BPR Id aM I sors cieaLinishusdehaprmdegedgsotaeshsergecsunsnaietieoeneneneainis 2

Ia TE MII Sostachac se csatcscohiriaca deedicnseinaadaadoninteiinedimniseunes l

ee I Baia csceniccascallcpadoscmance-dvediervabcbbandasmiunn 2

Beh AE FE cs Gainers swacaatnacbisceobadusarvaosaicescieaandoanioianny 2

ge a PF Seo ta renee ae eae RRP E RD 1,9

BOATS INO ie 2

WOR SO | 9

BUC tO 9

USE C7 a 17

WRC ON 2

Puss 15,17

BUSC ie. 10

wULC sem... 10

WORE UN cs 10

CRO oe 5

MEA 10

BULC iis 3, 10, 16

ee sa a passim

EO C1 5

ee Ca 3

USE CN ee 4

USC Ate NERO ORC EPI 5 5

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Be NA OE DOE Acivesseresessiniiniasipiiniesiasdaaseibaiaaians passim

BF lc ] FIONA secistintarsmsemicstiepiiciatiieetiaaiaataianmigiand 13

SF deen AFAR A PAD cinciccscsnivisiegiifaiaambtorideinmbiasional 15

BE eS Eve crtissincentisatecninaes Sinnapinianteatebediie’ 17

BP AE LIOE civiiisictinnascsscipenrtnimiceiidinaiipladadasievis 7,17

BT ele Se BFP ics osescivntessintircneaiadinigemmaei 7

BF de BP Pe icstanisiecsineciuseissatcsitgseabiontaianeditonaiias al 2

Pub. L. 93-406, Title IV, § 4004(f)(4), Sept. 2, 1974, 88

PME, DERI svc éstenienvinisasininieasinstcistewebadecsainteiesiabbenaaiiaided 15

Pub. L. 93-406, Title IV, § 4062, Sept. 2, 1974, 88 Stat.

BI snd. cicosrnisdcnoneawadlanizernniubteahiaceneianinaleaan aiiadaainn ss mececsae 13

Pub. L. 99-272, Title XI, §11011, Apr. 7, 1986, 100 Stat.

ds sticisscia tnagneucdacicacbonentinceniahcietsnchjiig Banana can: 17

Pub. L. 99-272, Title XI, § 11016(c)(6), Apr. 7, 1986,

100 Stat. $2, effective Jan. 1, 1986 ........ccccccesscssecceooves 15

Pub. L. 100-203, Title IX, § 9313(b)(6), Dec. 22, 1987,

EE NG 8 Rie ckivisarsiccsnadmncatndnn aaa 17

BO, BR. G0, FN a cedsisici cide 7

GR MN GS iii ee |

Vill

OTHER AUTHORITIES:

A EE conisvesascocesevenrerseseeaversenvocecavecoesesees 12

ooo cn wevecevadscebevesveateosenrseseeusvocureess 11

PBGC press release 05-36,

http://www.pbgc.gov/media/news-archive/2005/pr05-

Te ac cecartntsevestecereeveumienseveresresotseese 18

OPINIONS BELOW

The order of the United States Court of Appeals for the

District of Columbia Circuit denying en banc

reconsideration entered on April 28, 2006 is not officially

reported and is reproduced at App. 1. The order of the

United States Court of Appeals for the District of Columbia

Circuit affirming the District Court entered on January 27,

2006 is reported at 170 Fed. Appx. 142 and is reproduced at

App. 3 - 4.

The decision and order of the United States District

Court for the District of Columbia dismissing plaintiffs’

amended complaint dated August 25, 2004 is reported at

332 F. Supp.2d 231 and reproduced at App. 5 -19.

JURISDICTION

The order of the United States Court of Appeals for the

District of Columbia Circuit denying en banc

reconsideration was entered on April 28, 2006. This

petition is timely under 28 U.S.C. § 2101 and Supreme

Court Rule 13.1 because it is being filed within 90 days of

the order denying en banc reconsideration. This Court has

jurisdiction to review the order of the United States Court

of Appeals for the District of Columbia Circuit pursuant to

28 U.S.C. § 1254.

STATUTORY PROVISIONS INVOLVED

The relevant statutory provisions of Title IV of the

Employee Retirement Income Security Act, 29 U.S.C.

§§ 1301 et seg. (hereinafter referred to as “ERISA”’) are set

out at App. 20 — 54.

STATEMENT OF THE CASE

The jurisdiction of the district court was invoked under

28 U.S.C. § 1331 and 29 U.S.C §§ 1132(c)(1) and (f),

1303(f) and 1370(c).

A. Overview

In the early 1950s, Trans World Airlines (hereinafter

referred to as “TWA”’) and the Air Line Pilots Association,

International, (hereinafter referred to as “ALPA”), the

union representing TWA’s pilots, negotiated a defined

benefit pension plan for the TWA pilots known as the

“Pilots” A-Plan.”

In or around 1986, after substantial concessions by

ALPA and the other labor organizations representing

TWA’s employees, Carl Icahn purchased TWA. Some

months later, TWA acquired Ozark Airlines, along with

Ozark’s routes and pilots.

On or about January 31, 1992, TWA filed a voluntary

‘petition under Chapter_11 of the Federal Bankruptcy Code.

At that time, the Pilots’ A-Plan covered flight engineers,

first officers, and captains. A second defined benefit

pension plan covered most other eligible TWA employees.

During the bankruptcy proceeding, the PBGC filed a

contingent Proof of Claim of. approximately

$1,124,000,000 for the liability imposed on a plan sponsor

and its controlled group by § 1362 of ERISA. PBGC

estimated that $444,700,000 of the liability was attributable

to underfunding in the Pilots’ A-Plan. At the time PBGC

filed its Proof of Claim, TWA and its controlled group,'

' See 29 U.S. C. § 1301(a)(14).

which consisted of companies owned by Icahn, had

sufficient assets to satisfy PBGC’s claim in full. After the

PBGC filed its Proof of Claim, negotiations took place

among TWA, the PBGC, the Official Unsecured Creditors

Committee, Icahn and other interested parties in an attempt

to agree upon a plan of reorganization for TWA.

The parties reached an agreement known as the

“Comprehensive Settlement Agreement” (hereinafter

referred to as the “CSA”), to resolve all the issues

surrounding TWA’s reorganization in late 1992. As

relevant here, the CSA provided that Icahn would form a

new entity to assume and maintain the TWA pension plans

as the sole plan sponsor, contributing sponsor and plan

administrator for purposes of ERISA and the Internal

Revenue Code. The entity formed by Icahn is known as

“Pichin Corporation” (hereinafter referred to as “Pichin’’).

Pursuant to §7.2 of the CSA, Pichin became

responsible to meet all minimum funding requirements

applicable to the TWA pension plans less any amounts paid

by TWA pursuant to other provisions of the CSA. In § 8.2

of the CSA, the PBGC agreed that it would not terminate

the TWA pension plans except under 29 U.S.C.

§ 1342(a)(2) or at the request of Pichin if one or more

“Significant Events” as defined in § 10 of the CSA

occurred.

The CSA provides that the termination of the TWA

pension plans based upon the occurrence of a Significant

_Event under § 10 of the CSA would be carried out in

accordance with 29 U.S.C. §§ 1341(c) or 1342. Section 10

also provides that upon the termination of the TWA Pension

Plans, “...the liability under Title TV of ERISA of Pichin,

and all members of its controlled group, shall be limited,

individually and collectively, to an obligation to make eight

annual payments of $30 million each to the PBGC,

commencing eighteen months after the date on which the

TWA pension plans are terminated.” In other words, the

PBGC agreed to give up its collectable claim of

$1,124,000,000 for termination liability in exchange for

Pichin and Icahn’s promise to pay $240,000,000 over

eight and one half years beginning at a time unilaterally

selected by Icahn.

The Bankruptcy Court approved the CSA on December

30, 1992. The CSA became effective as of January 5,

1993.

B. The Termination of the TWA Pension Plans

On or about December 1, 2000, TWA, at Pichin’s

direction, sent a notice to the participants in the TWA

pension plans stating that Pichin intended to request

termination of the TWA pension plans, effective January 1,

2001. On or about December 14, 2000, Pichin sent a letter

to the PBGC requesting that PBGC terminate the TWA

pension plans pursuant to § 1342 of ERISA because of the

occurrence of a Significant Event as set forth in the CSA.

On January 2, 2001, the PBGC entered into an

agreement with Pichin, pursuant to which the TWA

pension plans, including the Pilots’ A-Plan, were

terminated effective January 1, 2001. The termination of

the Pilots’ A-Plan resulted in the immediate reduction of

the monthly benefit paid to petitioners and other retired

TWA pilots. The PBGC, in terminating the Pilots’ A-Plan

at Pichin’s request, acted solely on the basis of Pichin’s

written request for termination under the terms of the CSA

and PBGC’s authority under 29 U.S.C. § 1342(c).

C. The ALPA Lawsuit

On or about December 29, 2000, ALPA and two retired

TWA pilots filed suit in the district court for the District of

Columbia against Pichin, the PBGC and Icahn Associates

Corporation. In their suit, the plaintiffs alleged that the

PBGC had acted in an arbitrary and capricious manner

when it terminated the Pilots’ A-Plan because the PBGC

had not complied with the requirements set forth in 29

U.S.C § 1342(a). Specifically, the plaintiffs alleged that

the PBGC was obligated to meet the requirements set forth

in 29 U.S.C. § 1341 in 2000 and that PBGC could not rely

on the administrative record made in 1992. The plaintiffs

demanded that the court issue an injunction prohibiting

PBGC from terminating the Pilots’ A-Plan or, if the

pension plan had already been terminated, an order -

restoring the plan under 29 U.S.C. § 1347 and money

damages.

On cross motions for summary judgment, the district

court concluded that the administrative record developed

by the PBGC in 1992 was sufficient to justify the PBGC’s

termination of the Pilots’ A-Plan in 2001 since by its terms

the CSA did not terminate the pension plans but merely

postponed the time at which the PBGC would terminate the

pension plans.”

The plaintiffs appealed the decision of the district court

to the Court of Appeals for the District of Columbia

? See Airline Pilots Ass’n, International v. Pension Benefit

Guaranty Corp., 193 F.Supp. 2d 209 (D.D.C. 2002).

Circuit.> Asdescribed by the Court of Appeals, in the

district court:

...the pilots argue[d] (1) that the PBGC

failed _to make an _ administrative

determination in 1992 that the TWA pension —

plans satisfied ERISA's involuntary

termination criteria and (2) that even if the

PBGC made a proper determination in 1992,

it acted arbitrarily and capriciously by

failing to make a second such determination

in 2001 before formally terminating the

plans. The PBGC replies (1) that it in fact

made the requisite determination in 1992

by and (2) that ERISA authorizes it to enter into

agreements, like the CSA, which postpone --

possibly indefinitely -- execution of the

1992 termination decision.

Allied Pilots, 334 F.3d at 97. The Court of Appeals

affirmed the decision of the district court, finding that the

PBGC had made the necessary administrative findings in

1992 to justify termination of the Pilots’ A-Plan and that

the PBGC had the statutory authority to postpone the plan

termination date as part of a liability settlement agreement

such as the CSA. The court observed:

The PBGC's general authority to enter into

liability settlements comes from ERISA

section 4067, which empowers the PBGC

“to make arrangements with [plan] sponsors

and members of their controlled groups who

are or may become liable under [the statute]

* See Allied Pilots Ass'n v. Pension Benefit Guaranty Corp., 334

F.3d 93 (D.C. Cir. 2003).

for payment of their liability.” 29 U.S.C.

§ 1367 (emphasis added).

334 F.3d at 98.

D. Petitioners’ Lawsuit

Petitioners (hereinafter referred to collectively as the

“Adams plaintiffs”) are all retired TWA pilots. On or

about May 15, 2002, they filed suit against the PBGC,

Pichin, ALPA and various individual officials of ALPA in

the district court for the District of Columbia raising in

Count I of their complaint the issue raised by ALPA in its

earlier lawsuit. Shortly after the Adams plaintiffis filed

suit, the district court stayed further proceedings in the

Adams litigation pending the Court of Appeals’ decision in

Allied Pilots.

After the Court of Appeals announced its decision in

Allied Pilots, the Adams plaintiffs filed an amended

complaint. The First Amended Complaint alleges the

history of the TWA bankruptcy and the relevant provisions

of the CSA as set forth above. Count I of the First

Amended Complaint alleges that the primary purpose of

§ 10 of the CSA was to avoid the termination liability

imposed on a plan sponsor by 29 U.S.C. § 1362 in violation

of 29 U.S.C. § 1369. In q 80 of their First Amended

Complaint, the Adams plaintiffs further allege that the

PBGC had no lawful authority “...to forgive or to

compromise the liability for unfunded benefit liabilities....”

Both Pichin and PBGC filed motions to dismiss the

First Amended Complaint pursuant to Rule 12(b)(6) of the

Federal Rules of Civil Procedure. The district court

granted the motions on August 25, 2004, primarily relying

on the Court of Appeals’ earlier decision in Allied Pilots.

The Court of Appeals affirmed the district court’s decision

based upon its earlier holding in Allied Pilots that PBGC

had broad authority to enter into liability settlements.

REASONS FOR GRANTING THE PETITION

In the thirty years since ERISA was enacted, the

pension benefit guaranty system administered by the PBGC

has become an integral part of the nation’s economy

touching the lives of millions of Americans. According to

PBGC’s Performance and Accountability Report for Fiscal

Year 2005, as of September 30, 2005, PBGC covered 44.1

million workers in over 30,000 active pension plans and was

providing benefits to 1.3 million workers whose pension

plans had failed. During 2005, PBGC took over

responsibility for 120 additional pension plans, thereby

increasing its deficit by $10.7 billion. As of September 30,

2005, PBGC estimated that it was “reasonably possible”

that plans with an additional $108 billion in unfunded

liabilities would fail in the future.

As a result of PBGC’s current policies, more and more

companies are shifting their massive unfunded pension

liabilities to the PBGC and PBGC’s financial condition is

deteriorating. Left unchecked, these policies will

ultimately require a multi-billion dollar bail out of the

pension guaranty system by American taxpayers. This case

presents a critical question central to the operation of the

pension guaranty system crafted by Congress as set forth in

Title IV of ERISA. Simply put, the issue is whether

Congress reserved to itself the right to dictate the terms

under which the sponsor of a pension plan with unfunded

liabilities can shift those liabilities to the PBGC or whether

it granted to the PBGC the unlimited power and authority to

strike whatever deal PBGC’s bureaucrats found most

attractive when agreeing to assume responsibility for billions

of dollars of unfunded pension liabilities.

I. The Structure of the Pension Guaranty System

The enactment of ERISA on September 2, 1974 was the

culmination of almost a decade of study and debate by

Congress on how to improve various aspects of private

pension plans in the United States. One of the forces

driving Congressional. action was the all too familiar

scenario where beneficiaries did not receive promised

benefits because their pension plans had not accumulated

sufficient assets before being terminated by the employer.

To combat this problem, Congress created the plan

termination insurance program set forth in Title IV of

ERISA, 29 U.S.C. §§ 1301 et seg. Nachman Corp. v.

PBGC, 446 U.S. 359, 362 (1980). -

The system is administered by the PBGC, an

independent government corporation whose board is

composed of the Secretary of the Treasury, the Secretary of

Labor and the Secretary of Commerce.* The PBGC’s main

responsibilities are:

(1) to encourage the continuation and

maintenance of voluntary private pension

plans for the benefit of their participants,

(2) to provide for the timely and

uninterrupted payment of pension benefits to

participants and beneficiaries under plans to

which this subchapter applies, and

(3) to maintain premiums established by the

corporation under section 1306 — this title

at the lowest level consistei.” ith carrying

out its obligations under this sue« hapter.

* 29 U.S.C. § 1302.

> 29 U.S.C. § 1302(a).

The PBGC is primarily funded by premiums paid by

employers who maintain defined benefit pension plans.

The basic premium for single employer pension plans is

currently $30.00 per employee per year’ plus an additional

premium as set forth in 29 U.S.C. § 1306(a)(3)(E) for any

year in which the plan has an unfunded current liability.

A sponsor of a single employer defined benefit plan

may apply to the PBGC for a voluntary “standard

termination” of its plan pursuant to 29 U.S.C. § 1341(b) or

a “distress termination” under § 1341(c). The primary

difference between a standard termination and a distress

termination is that in the former, the plan has sufficient,

assets to cover its liabilities on the termination date while in

the latter case, it does not. In a distress termination, the

PBGC becomes obligated to pay to retired plan participants

those benefits guaranteed under 29 U.S.C. § 1322.

In addition to a voluntary termination initiated by the

pian sponsor, § 1342 gives the PBGC the authority to apply

to a district court for an order involuntarily terminating a

single employer defined benefit pension plan. In this case,

aS in a voluntary distress termination, PBGC becomes

obligated to pay those benefits guaranteed under §1322 to

retired plan participants.

A. Termination Liability

As Congress considered the proposed insurance

program, it quickly became concerned with the possibility

that a solvent employer might deliberately terminate a

pension plan knowing that the insurance program would

then become responsible for paying ongoing benefits.

6 29 U.S.C. § 1306(a)(3)(A)(i). Prior to January 1, 2006, the

basic premium was $19.00 per employee per year.

Similarly, Congress was concerned that employers would

agree to overly generous pension benefit increases that they

could not afford, knowing that the insurance program

would ultimately pay for these benefits. Nachman, 446

U.S. at 367 at n.12. To control this problem, Congress

developed the concept of “termination liability.” In

commenting on the Conference Report on H.R. 2, the

House bill that was ultimately enacted by Congress,

Senator Williams, the Chairman of the Senate Committee

on Labor and Public Welfare, discussed the termination

insurance provisions of the bill and observed:

= Since there would be a possibility of abuse

by solvent employers who terminate a plan

and shift the financial burden to the

insurance program, notwithstanding their

own financial ability to continue funding the

plan, the conference bill imposes liability on

employers whose plans terminate, to

reimburse the program for benefits paid by

the corporation. This liability extends to 30

percent of the employer’s net worth.

However, the bill does provide that

employers will be permitted to exercise the

option to obtain additional insurance to

cover such contingent liability.

1974 US.C.CA.N. 5185. Similarly, the Committee report

accompanying S.4, the Senate version of the bill, stated:

The Committee recognizes that in order to

provide adequate protection to employees

against loss of vested benefits owing to

premature plan termination, it is necessary

for the insurance program to cover all forms

of plan termination regardless of the

1974 U.S.C.C.A.N. 4862. The Committee described its

circumstances giving rise to the termination.

The Committee also recognized that some

degree of employer liability was essential

where the employer was not insolvent at the

point of plan termination in order to

preclude abuse by shifting the financial

burden to the plan termination insurance

program despite the fact that the employer

had available funds to continue funding the

plan.

solution to the problem as follows:

Id.

Having determined that participation in the

plan termination insurance program was

essential for all plans, and that some degree

of employer liability was necessary, the

question of the degree of such liability

becomes important. The Committee had

concern that if the degree of liability was

absolute to the extent of the employer’s

assets, it might drive some employers to the

brink of bankruptcy, impose substantial

economic hardship, or discourage the

establishment of plans or the reasonable

liberalization of benefits.

Accordingly, the Committee endorsed a

formula of employer liability which requires

the employer to reimburse the plan

termination insurance program for the total

amount of insurance paid, but in no event

greater than 50% of employer’s net worth at

time of plan termination.

ERISA, as finally enacted in 1974, provided in

§ 1362(b) that:

Any employer to which this section applies

shall be liable to the corporation, in an

amount equal to the lesser of —

(1) The excess of — ,

(A) The current value of ti plan’s

benefits guaranteed under this title on the

date of termination over

(B) The current value of the plan’s

assets allocable to such benefits on the date

of termination, or

(2) 30 percent of the net worth of the

employer determined as of a day, chosen by z

the corporation but not more than 120 days 4

prior to the date, computed without regard to

any liability under this section.

Pub. L. 93-406, Title IV, § 4062, Sept. 2, 1974, 88 Stat.

1029.

As of the date of the CSA, the relevant portion of

§ 1362 provided:

§ 1362. Liability for termination of ‘single-

employer plans under a distress termination

or a termination by corporation

(a) In general

In any case in which a single-employer plan

is terminated in a distress termination under

section 1341(c) of this title or a termination

otherwise instituted by the corporation under

section 1342 of this title, any person who is,

on the termination date, a contributing

sponsor of the plan or a member of such a

contributing sponsor’s controlled group

shall_incur liability under this section. The

mn liability under this section of all such

persons shall be joint and several. The

liability under this section consists of—

(1) Liability to the corporation, to the

extent provided in subsection (b) of this

section, and

(2) Liability to the trustee appointed

under subsection (b) or (c) of section 1342

of this title, to the extent provided in

subsection (c) of this section.

(b) Liability to corporation-

(1) Amount of liability

(A) In general

Except as provided in subparagraph (B), the

liability to the corporation of a person

described in subsection (a) of this section

shall be the total amount of the unfunded

benefit liabilities (as of the termination date)

to all participants and beneficiaries under the

plan, together with interest (at a reasonable

rate) calculated from the termination date in

accordance with regulations prescribed by

the corporation. (emphasis added)

B. The Transition Provisions

In enacting ERISA, Congress recognized that the new

law would affect every private pension plan in the United

States. To minimize the hardship the new provisions might

Cause sponsors of existing pension plans, Congress

provided special transition rules to phase in some of

ERISA’s more burdensome obligations. For example, in

§ 1304(f)(4)’ of the Act, Pub. L. 93-406, Title TV,

§ 4004(f)(4), Sept. 2, 1974, 88 Stat. 1029, Congress gave

the PBGC specific statutory authority to waive the

termination liability imposed by § 1362, but for a limited

time period only. § 1304(f)(4) provided:

(f) In addition to its other powers under this

title, for only the first 270 days after the date

of enactment of this Act the corporation

may...

(4) waive the application of the

provisions of sections 4062, 4063, and

4064 to, or reduce the liability imposed

under such sections on, any employer

with respect to a plan terminating during

that 270 day period if the corporation

determines that such waiver or reduction

is necessary to avoid unreasonable

hardship in any case jn which , the

employer was not able, as a practical

matter, to continue the plan. (emphasis

added)

Section 1304(f)(4), now repealed, is the one and only

instance in which Congress gave PBGC the authority to

waive or modify the amount of termination liability.

II. The PBGC Cannot Change the Amount of the

Termination Liability Fixed by Congress

As set forth in § 1362(b)(1)(A), the “... liability to the

corporation of a person described in subsection (a) of this

section shall be the total amount of the unfunded benefit

Section 1304 was repealed by Pub. L. 99-272, Title XI,

§ 11016(c)(6), Apr. 7, 1986, 100 Stat. 82, effective Jan. 1, 1986.

liabilities... together with interest... calculated from the

termination date...” The language of this section leaves no

room for discretion, because the word “shall” is a

mandatory command not subject to discretion. This Court

in the context of a housing subsidy dispute held that the

word “shall” must be interpreted as a mandatory command,

Pierce v. Underwood, 487 U.S. 552, 569-70 (1988). A year

later this Court, in considering whether the Comprehensive

Forfeiture Act of 1984, 98 Stat. 2044, as amended, 21

U.S.C. § 853(a), required forfeiture of assets to be used to

pay a defendant’s attorneys fees, observed that in using the

word “shall,” “Congress could not have chosen stronger

words to express its intent that forfeiture be mandatory in

cases where the statute applied.” U.S. v. Monsanto, 491 U.S.

600, 607 (1989).

in the instant matter, the unambiguous language of

§ 1362 and the legislative history set forth above leave no

doubt that Congress has fixed, by operation of law, and

without exception, the amount of termination liability

imposed on a plan sponsor and members of its controlled

group either in a § 1341(c) distress termination or when the

PBGC exercises its statutory authority under § 1342 and

involuntarily terminates a single employer pension plan.

Imposition of termination liability cannot be avoided by the

plan sponsor and, except for the first 270 days after

ERISA was enacted, the amount of the termination

liability imposed cannot be modified by the PBGC.

Despite the plain language used by Congress in § 1362,

the PBGC has steadfastly maintained that it has the power

to compromise a plan sponsor’s termination liability.

PBGC has repeatedly argued that it must have the authority

to compromise the amount of termination liability because

any other system “...would be totally impracticable” and

“PBGC would be required to litigate every single case to

the bitter end, regardless of the cost or risk involved.”® In

support of its contention, PBGC has _ pointed to

§ 1302(b)(2)’s “sue and be sued” language, the addition of

subsection (b)(3) to § 1362 in 1986” and the addition of the

phrase “or may become” to § 1367 in 1987.'° PBGC has

. hot explained why Congress thought it necessary to include

§ 1304(f(4) when it enacted ERISA if it had already

granted PBGC the same authority in § 1302(b)(2) or why

Congress found it necessary to again give PBGC the same

authority in 1986 and again in 1987. PBGC has also not

offered an explanation as to why Congress, if it in fact

intended to modify § 1362’s mandatory language, did so

with language subject to various interpretations instead of

with the plain language it previously used in § 1304(f)(4).

Ill. The Position of the PBGC Endangers the

Existence of the Pension Guaranty System

Created by Congress

As envisioned by Congress and implemented through

the language of § 1362, the liability imposed on a plan

* Brief of Appellee, Pension Benefit Guaranty Corp., filed in the

instant matter in the United States Court of Appeals for the

District of Columbia Circuit at page 15.

° Pub. L. 99-272, Title XI, §11011, Apr. 7, 1986, 100 Stat. 82,

added § 1362(b)(3) which states:

Alternative Arrangements --The corporation

and any person liable under this section may

agree to alternative arrangements for the

satisfaction of liability to the corporation under

this subsection.

Pub. L. 100-203, T ‘le LX, § 9313(b)(6), Dec. 22, 1987, 101

Stat. 1330.

sponsor serves two purposes: it reduces the amount the

PBGC has to spend from its premium income to make the

guaranteed payments required by the Act and it deters plan

sponsors from shifting their underfunded pension plans to

the PBGC. Over the last thirty years, as it freely admits,

the PBGC has on many occasions compromised the amount

of the liability imposed by § 1362 either because it was

unwilling to litigate the accuracy of its liability

determinations or because it determined that it needed to do

so to permit the plan sponsor to emerge from bankruptcy.

In the instant case, PBGC did not want to litigate the

accuracy of its liability determination with Icahn and

ultimately decided as a matter of economic policy that

rather than pursue Icahn for almost $1.2 billion in

termination liability, it was more important to compromise

its § 1362 liability Claim so TWA could be reorganized.

PBGC and the Court of Appeals justify and validate

PBGC’s decisions by pointing out that TWA continued to

exist for eight more years and the maximum benefit

payable to TWA retirees by PBGC increased by 44%. Yet

others believe as a matter of economic policy that it would

have been better for PBGC to pursue its § 1362 claim

against Icahn and let TWA be liquidated, thereby reducing

PBGC’s deficit.

Most recently in April 2005S, as part of the United

Airlines bankruptcy, PBGC has again compromised its

§ 1362 liability claim. Under the terms of the settlement, as

described in an April 22, 2005 press release!’ “...PBGC

[has agreed to] terminate and become trustee of the

company’s four pension plans and the agency’s claims

against the company [will] be settled.” The settlement

‘| Press release 05-36 is available on PBGC’s web site at

http://www.pbgc.gov/media/news-archive/2005/pr05-36.html.

unfunded liabilities in exchange for up to $1.5 billion in

notes and convertible stock in the reorganized UAL Corp.

The settlement will increase PBGC’s deficit by at least $4.1

billion. News reports indicate that other airlines such as

Delta, Northwest and possibly American, in order to remain

competitive, will likely attempt to shift their pension

obligations to PBGC as well.

This Court should grant this petition to consider the

important question raised by this case - whether Congress

gave PBGC the unlimited and unreviewable discretion to

make whatever deal it wants with a company looking to

shift its pension obligations to the PBGC or whether the

provisions of § 1362 set forth the only terms under which

the sponsor of a pension plan may shift its unfunded

liabilities to PBGC. It seems very likely that in the next

few years even more companies with substantially

underfunded pension plans will look to shift those liabilities

to PBGC. The terms under which such transfers occur will

dictate whether the PBGC will be able to meet its statutory

obligations to the millions of retired workers whose

pensions it guarantees. If PBGC continues to act beyond

its statutory authority, just as day follows night, the pension

payments so many Americans rely on will be placed in

jeopardy while America’s taxpayers will be saddled with a

multi-billion dollar PBGC bailout.

CONCLUSION

The Petition for a Writ of Certiorari should be granted.

Respectfully submitted,

David S. Dessen,

Counsel of Record

Dessen, Moses & Rossitto

600 Easton Road

Willow Grove, PA 19090

(215) 658-1400

Attomey for Petitioner

App. |

United States Court of Appeals,

For The District Of Columbia Circuit

No. 04-5333 September Term, 2005

02cv00945

03cv01870

Filed On: April 28, 2006

Allen D. Adams, II, et al.,

Appellants

Pension benefit Guaranty Corporation, et al.,

Appellees.

Consolidated with 04-5334, 04-5380

BEFORE: Ginsburg, Chief Judge, and Sentelle,

Henderson, Randolph, Rogers, Tatel,

Garland’, Brown, and_ Griffith,

Circuit Judges

ORDER

; Upon consideration of appellant/cross-appellee’s

petition for rehearing en banc, the responses thereto, and

the absence of a request by any member of the court for a

vote, it is

ORDERED that the petition by denied.

)

* Circuit Judge Garland did not participate in this matter.

App. 2

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

By: ff

Michael C. McGrail

Deputy Clerk

App. 3

United States Court of Appeals,

District of Columbia Circuit.

Allen D. ADAMS, I, et al.,

Appellants

Vv.

PENSION BENEFIT GUARANTY CORP.,

Pichin Corp.,

Appellees.

Nos. 04-5333, 04-5334.

Jan. 27, 2006.

Rehearing En Banc Denied April 28, 2006.

Appeal from the United States District Court for the

District of Columbia, (No. 02cv0945), (No. 03cv1870).

David Samuel Dessen, Dessen Moses & Sheinoff, Willow

Grove, PA, for Appellants.

Aula J. Connelly, Jeffrey B. Cohen, Pension Benefit

Guaranty Corporation , (PBGC) Office of General Counsel,

David P. Gersch, Andrew Tanner Karron, John D. Daley,

Graham James Jenkins, Arnold & Porter LLP, Washington,

DC, for Appellees.

Before GINSBURG, Chief Judge, RANDOLPH, Circuit

Judge, and EDWARDS, Senior Circuit Judge.

JUDGMENT

PER CURIAM.

This appeal was considered on the record from the United

App. 4

States District Court for the District of Columbia and on the

briefs and arguments of the parties. It is

ORDERED AND ADJUDGED that the judgment of the

district court be affirmed for the reasons stated in the

opinion of the district court, see Adams v. Pension Benefit

Guar. Corp., 332 F.Supp.2d 231 (D.D.C.2004), except

insofar as the district court based Part IV.C of its decision

upon the alternative ground of res judicata.

Pursuant to D.C. Circuit Rule 36, this disposition will not

be published. The Clerk is directed to withhold issuance of

the mandate herein until seven days after resolution of any

timely petition for rehearing or rehearing en banc. See Fed.

R.App. P. 41(b); D.C.Cir. Rule 41. :

App. 5

United States District Court,

District of Columbia.

No. CIV.A. 02-0945(RCL)

Allen D. ADAMS II, et al.,

Plaintiffs,

Vv.

PENSION BENEFIT GUARANTY

CORPORATION, et al.,

Defendants

Aug. 25, 2004.

David S. Dessen, Dessen, Moses & Sheinoff, Philadelphia,

PA, for Plaintiffs.

Andrea Margaret Wong, Andrew Tanner Karron, David P.

Gersch, John Daniel Daley, Amold & Porter, LLP,

Washington, DC, for Defendants.

MEMORANDUM OPINION

LAMBERTFE™ District Judge.

This matter comes before the court on defendant Pension

Benefit Guarantee Corporation's (““PBGC”) and defendant

Pichin's motions to dismiss plaintiffs' First Amended

Complaint. Defendants move to dismiss this action

pursuant to Federal Rule of Civil Procedure 12(b)(6) on

grounds that the complaint fails to state a claim upon which

relief may be granted. Plaintiffs submitted memoranda in

opposition, and the defendants filed replies to plaintiffs’

oppositions. Upon consideration of the parties’ filings, the

relevant law and the facts of this case, this Court finds that

App. 6

the defendants’ motions to dismiss should be GRANTED

in accordance with this memorandum opinion.

I. Introduction

This case arises under the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.

The plaintiffs, retired airline pilots seek declaratory and

injunctive relief based upon the termination of Trans World

Airlines's (“TWA”) pilot retirement plan (“Pilots’ A-Plan’’).

Specifically, plaintiffs assert that portions of a

Comprehensive Settlement Agreement (“CSA”) between

TWA, the TWA pilots’ union, the financier Carl Icahn and

various entities associated with Icahn (the “Icahn entities”),

including defendant Pichin Corporation, and the PBGC

comprise a transaction to evade liability under ERISA.

Plaintiffs also assert that both the Pichin Corporation

(“Pichin”) and the PBGC breached their fiduciary duties

owed to the participants and beneficiaries of the plan.

II. Background

A. The Comprehensive Settlement Agreement

In January 1992, TWA filed for Chapter 11 bankruptcy in

the United States Bankruptcy Court for the District of

Delaware. At the time of the 1992 bankruptcy petition,

there were two identified pension plans covering TWA's

employees (“the pension plans”). One, the Pilots' A-Plan,

covered pilots and the other covered most other TWA

employees. Pls.’ First Am. Compl. 4 30. According to

plaintiffs, there were unfunded benefit liabilities for the

pension plans in the amount of $1.124 billion at the time of

the bankruptcy proceeding. Of this liability, $444,700,000

was attributable to unfunded benefit liabilities for the

Pilots’ A-Plan. Id. ¥ 31. In or around October of 1992,

App. 7

PBGC announced its intention to terminate TWA's pension

plans. In order to postpone or prevent termination of the

plans, all parties agreed upon the terms of the CSA. The

CSA provided, inter alia, that:

(1) Icahn would loan TWA $200 million; (2) Pichin would

sponsor the pension plans instead of TWA. Thus, Icahn

became responsible for making the minimum funding

contributions and TWA was released from all liability for

the plans; (3) TWA was to issue $300 million in notes to

make part of the annual pension plan contributions in

compliance with ERISA and provisions of the Internal

Revenue Code; (4) PBGC would not terminate the plans

except under ERISA § 4042(a)(2), 29 U.S.C. § 1342(a)(2)

or at the request of the Icahn sponsor; (5) PBGC would, at

Icahn's request, terminate the plans if a “Significant Event,”

as defined in the CSA, occurred, and (6) that in the event of

a Significant Event requiring termination, Icahn's liability

to PBGC would be limited to $240 million.

See Allied Pilots Ass'n v. PBGC, 334 F.3d 93, 96

(D.C.Cir.2003) (emphasis in original) (quoting Air Line

Pilots Ass'n v. PBGC, 193 F.Supp.2d 209, 213

(D.D.C.2002)); Plaintiffs’ First Amended Complaint 4 37-

47. The bankruptcy court approved the CSA as part of

TWA's Chapter 11 reorganization plan on December 30,

1992. See _In re Trans World Airlines, Inc., No. 92-115

(Bankr.D.Del. Dec. 30, 1992). With the CSA in effect, the

pension plans remained in existence and TWA continued in

operation for an additional eight years. During that time,

Pichin acted as the sole plan sponsor and contributing

sponsor for the purposes of ERISA and the Internal

Revenue Code.FN 1}

FN 1. See Plaintiffs’ First Amended Complaint { 58.

App. 8

The pension plans were ultimately terminated effective

January 1, 2001 after PBGC received notice from Pichin

that a defined “Significant Event” had occurred. The

PBGC, after termination of the pension plans, estimated

that the Pilots’ A-Plan alone was underfunded by

approximately $200 million. FN2 In accordance with the

CSA, Pichin's termination liability under both TWA .

pension plans consisted of $240 million to be paid in eight

annual payments of $30 million.

FN2. Id. ¥ 69.

B. The First Pilots' Case

Following the termination of the plans, the Air Line Pilots

Association, International (“ALPA”) and two individual

pilots filed suit in this court against PBGC and Pichin. The

plaintiffs in that suit claimed that the PBGC had exceeded

its statutory authority by terminating the Pilots’ A-Plan

based on the terms of the CSA, rather than based on

ERISA's criteria for involuntary terminations. On cross-

motions for summary judgment, the district court held that

the neither the termination nor the CSA itself violated

ERISA and- therefore, actions taken by the PBGC to

terminate the Pilots’ A-Plan were not unlawful under

ERISA. FN3

FN3. See Air Line Pilots Ass'n, Int'l, 193 F.Supp.2d at 218-

19.

The pilots appealed the district court's decision under the

representation of the Allied Pilots Association

(“APA”).FN4 On appeal, the pilots argued (1) that the

PBGC failed to make an administrative determination in

1992 that the TWA pension plans satisfied ERISA's

involuntary termination criteria and (2) that even if the

App. 9

PBGC made a proper determination in 1992, it acted

arbitrarily and capriciously by failing to make a second

such determination in 2001 before formally terminating the

plans. Allied Pilots Ass'n, 334 F.3d at 97.

FN4. The APA assumed the ALPA's collective bargaining

responsibilities following TWA's acquisition by American

Airlines, Inc. in 2001.

The D.C. Circuit affirmed the district court's decision and

concluded that the CSA was lawful under ERISA and that

the CSA mandated the PBGC's termination of the pension

plan- upon the occurrence of a Significant Event. In

addition, the court held that ERISA authorizes the PBGC to

(1) enter into settlement agreements like the one challenged

in this case and (2) postpone termination pending the

occurrence of a defined event. The court further concluded

that PBGC had not acted arbitrarily or capriciously since

“the PBGC was obligated to terminate the plans when the

Significant Event occurred ----” Id. at 98.

B. The Instant Matter

Following the D.C.. Circuit's ruling, the plaintiffs

commenced this action against Pichin and the PBGC. The

plaintiffs’ First Amended Complaint asserts three claims for

relief: (1) that termination of the Pilots' A-Plan under the

CSA was a transaction to evade liability and thus, Pichin

and the Icahn entities are in violation of ERISA § 4069, 29

U.S.C. § 1369; (2) that Pichin, as the sole plan sponsor,

contributing sponsor, and plan administrator of the TWA

Pension Plans, breached its fiduciary duty to the plan

participants and beneficiaries by having engaged in a

prohibited transaction under ERISA; and (3) that PBGC's

failure to demand or to initiate action to recover the full

amount of the unfunded benefit liabilities from Pichin and

App. 10

the Icahn entities constitutes a breach of the PBGC's

fiduciary duty as a plan trustee.

If. Legal Standards

A motion to dismiss under Rule 12(b)(6) tests whether the

plaintiff has properly stated a claim upon which relief can

be granted. See FED. R. CIV. P. 12(b)(6). The Federal

Rules only require that the complaint include “a short and

plain statement of the claim showing that the pleader is

entitled to relief,” FED. R. CIV. P. 8(a)(2), because the

complaint “must simply ‘give the defendant fair notice of

what the plaintiff's claim is and the grounds upon which it

rests.’ ” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512,

122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quoting Conley v.

Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

In deciding a 12(b)(6) motion to dismiss the Court will

consider the facts alleged in the pleadings, documents

attached as exhibits or incorporated by reference in the

pleadings, and matters which the Court may take judicial

notice. EEOC vy. St. Francis Xavier Parochial. Sch., 117

F.3d 621, 624 (D.C.Cir.1997); Chandamuri v. Georgetown

University, 274 F.Supp.2d 71, 76-77 (D.D.C.2003). The

Court must accept as true all well-pleaded factual

allegations and grant plaintiff the benefit of all reasonable

inferences that can be derived from the alleged facts.

Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2

L.Ed.2d 80 (1957). The suit may be dismissed for failure to

state a claim only if “it appears beyond doubt that the

plaintiff can prove no set of facts in support of his claim

which would entitle him to relief.” Id.

App. 11

IV. Analysis

The court will first address the allegation in plaintiffs’

complaint that the CSA constitutes a transaction having a

principal purpose of evading liability imposed by ERISA §

4062, 29 U.S.C. § 1362 and thereby in violation of ERISA

§ 4069, 29 U.S.C. § 1369. See Amended Compl. { 81. In

accordance with their claim, plaintiffs seek, inter alia, (1) a

declaratory judgment that the portion of the CSA

purporting to relieve Pichin and the Icahn entities from a

significant portion of their liability is unlawful under

ERISA and therefore void and unenforceable, and (2) an

injunction requiring immediate restoration of the Pilots' A-

Plan and restitution from Pichin and the Icahn entities of all

benefits that were lost by plaintiffs as a result of the alleged

unlawful termination of the Pilots’ A-Plan in an

underfunded status.FN5

FNS. Plaintiffs define the amount of restitution owed as the

difference in the pension benefits plaintiffs are currently

receiving from PBGC and the pension benefits they were

receiving prior to January 1, 2001. See Pls.’ Resp. to Def.

Pichin's Mot. to Dismiss Pls.’ First Am. Compl]. at 19 (“Pls.'

Resp. to Pichin's Mot. Dismiss”).

Section 10 of the CSA provides, inter alia, that upon

termination of the pension plans, “the liability under Title

IV of ERISA of the Icahn sponsor, and all members of its

controlled group, shall be limited, individually and

collectively, to an obligation to make eight annual

payments of $30 million each to the PBGC,” commencing

eighteen months after the date on which the pension plans

are terminated. Plaintiffs argue that under ERISA § 4062,

29 U.S.C. § 1362, “plan sponsors and the members of their

App. 12

controlled groups are liable, upon plan termination, to pay

for the | amount of unfunded benefit liabilities, plus interest

from the termination date.” Pls.’ First Am. Compl. ¥ 48

(emphasis in original). Thus, according to plaintiffs, the

$240 million cap on Icahn and Pichin's termination liability

under both pension plans constituted a “dormant scheme ---

to evade eighty percent (80%) of their 1992 termination

liability ----” Pls.’ Resp. to Pichin's Mot. Dismiss at 21.

Section 1362 provides that, in the case of any termination

of a single-employer defined benefit plan under ERISA §

4042, 29 U.S.C. § 1342, the contributing sponsor of the

plan or a member of such a contributing sponsor's

controlled group shall incur joint and several liability for

the liability to the corporation and the liability to the

designated section 1342 trustee. According to plaintiffs’

interpretation of section 1362, “[nJeither the PBGC nor any

other party to the [CSA] had any lawful authority to forgive

or to compromise the liability for unfunded benefit

liabilities arising from the Pilots’ A-Plan ---- Moreover,

plaintiffs’ central argument is that the CSA's termination

liability cap is unlawful under ERISA because PBGC lacks

the statutory authority to compromise the amount of Icalhin's

§ 1362 termination liability.

Plaintiffs’ arguments fail under the D.C. Circuit's express

confirmation that the PBGC has general authority under

ERISA § 4067, 29 U.S.C. § 1367 to enter into liability

settlements. As aptly stated by the D.C. Circuit:

The PBGC's general authority to enter into liability

settlements comes from ERISA section 4067, which

empowers the PBGC “to make arrangements with [plan]

sponsors and members of their controlled groups who are

or may become liable under [the statute] for payment of

wueir liability.” As the bankruptcy court found, the PBGC

App. 13

entered into the CSA pursuant to its section 4067 authority.

Under the CSA, Icahn agreed to accept the ongoing role of

plan sponsor and to contribute funds to shore up the plans;

in return, the PBGC agreed to _ postpone-perhaps

indefinitely-its termination of TWA's plans, to cap Icahn's

direct liability at $240 million, and to terminate the plans,

upon [Icahn's notification that a significant event occurred].

Each of these promises and counter-promises formed an

integral part of the overall negotiated settlement, whose

purpose was to prevent termination altogether.

Allied Pilots Ass'n, 334 F.3d at 98-99 (citations omitted).

Plaintiffs assert that the D.C. Circuit's interpretation of

section 1367 is not controlling in the case at bar.

Specifically, piaintiffs characterize the D.C. Circuit's

interpretation as mere dicta, rather than binding precedent.

This court disagrees. The D.C. Circuit could not have been

clearer in stating that ERISA's authorization of the CSA

was a key element to its decision that the termination of the

plans was done lawfully. The opinion begins by stating,

“Because we conclude that federal law authorizes the

PBGC to enter into setthement agreements like the one

challenged in this case, we agree with the district court that

the PBGC's termination of TWA's pension plans was

permissible.” Allied Pilots Ass'n, 334 F.3d at 95. This court

finds that the D.C. Circuit's interpretation of section 1367

authority was central to the court's ruling and part of its

holding in the case. As such, this court finds that the D.C.

Circuit's holding is binding precedent and controiling in the

case at bar. Having found that the D.C. Circuit's holding

that “federal law authorizes the PBGC to enter into

settlement agreements like the one challenged in this case,”

is controlling, plaintiffs’ claim that the CSA constitutes a

prohibited transaction under section 1369 is foreclosed.

App. 14

Even if this court did not find that the D.C. Circuit's

interpretation of PBGC's statutory authority is binding

precedent, plaintiffs' claim that Pichin and the Icahn entities

violated section 1369 is without merit. Section 1369(a)

provides in relevant part:

If a principal purpose of any person in entering into

any transaction is to evade liability to which such

person would be subject under this subtitle and the

transaction becomes effective within five years

before the termination date of the termination on

which such liability would be based, then such

person and the members of such person's controlled

group (determined as of the termination date) shall

be subject to liability under this subtitle in

connection with such termination as if such person

were a contributing sponsor of the terminated plan

as of the termination date.

29 U.S.C. § 1369(a) (emphasis added). Plaintiffs cite the

Third Circuit's interpretation in Pension Ben. Guar. Corp.

v. White Consol. Indus., Inc., 998 F.2d 1192, 1200 (3rd

Cir.1993) that the enumerated transactions discussed in

section 1369 were not limited to “the types of transactions

covered, to traditional sales of pension funds to another

entity.” Plaintiffs rely on White to support the plaintiffs’

contention that “[s]ection 1369 applies to ‘any transaction’

whose principal purpose ts-to avoid § 1362 liability” rather

than applying only to unilateral efforts to evade liability.

Pis.' Resp. to Pichin's Mot. Dismiss at 20.

This court agrees that the clear and unambiguous language

in section 1369 applies to persons entering any transaction

with a principal purpose of evading liability. However, this

court does not agree that Pichin and the Icahn entities’

involvement in the CSA constitute evasion under ERISA.

App. 15

The CSA at issue constitutes a statutorily authorized

transaction between TWA, the pilots’ union, Icakin and the

Icahn entities, including Pichin, and the PBGC to settle

ERISA liability. It is not by mistake that Congress issued

an express grant of settlement authority in ERISA section

4062(b)(3), 29 U.S.C. § 1362(b)(3). Section 4062(b)(3)

provides that “(t]he corporation and any person liable under

this section may agree to alternative arrangements for the

satisfaction of [section 4062} liability to the corporation

-+-”29 U.S.C. § 1362(b)(3) (emphasis added). In addition,

the Supreme Court has made clear that Congress “granted

the PBGC discretion to arrange reasonable terms for the

payment of [ERISA] liability.” See Nachman Corp. v.

Pension Ben. Guar. Corp., 446 U.S. 359, 367, 100 S.Ct.

1723, 64 L.Ed.2d 354 (1980) (interpreting ERISA § 4067,

29 U.S.C. § 1367). Having concluded that the CSA

constitutes a statutorily authorized arrangement to settle

unfunded liability, this court rejects plaintiffs’ claim that the

CSA violates section 1369.

The court now addresses the plaintiffs’ second claim that

Pichin breached its fiduciary duty when it procured the

termination of the Pilots' A-Plan. Plaintiffs assert that as

plan sponsor, contributing sponsor, and plan administrator

Pichin had a fiduciary duty under ERISA § 404(a)(1)(A),

29 U.S.C. § 1104(a)(1)(A) to act solely in the interest of the

participants and beneficiaries of the plan.FN6 According to

plaintiffs, the CSA appointed Pichin a “trustee” under

ERISA § 4042(b), 29 U.S.C. § 1342(b). Pls.’ Resp. to

Pichin's Mot. Dismiss. at 22-23. Under section 1342(d)(3),

a trustee that has been appointed under section 1342(b) is

“a fiduciary within the meaning of paragraph (21) of

section 1002 of [29 U.S.C.].” FN7

App. 16

FN6. See Pls. First Am. Compl. { 92.

FN7. 29 U.S.C. 1002(21)(A) provides in relevant part that:

[A] person is a fiduciary with respect to a plan to the extent

(i) he exercises any discretionary authority or discretionary

control respecting management of such plan or exercises

any authority or control respecting management or

disposition of its assets, (ii) he renders investment advice

for a fee or other compensation, direct or indirect, with

respect to any moneys or other property of such plan, or has

any authority or responsibility to do so, or (iii) he has any

discretionary authority or discretionary responsibility in the

administration of such plan.

As Pichin correctly points out in its reply, the CSA

appointed PBGC as the statutory trustee, not Pichin.

Section 12.1 of the CSA provides in relevant part that

“upon or as soon as practicable after a Non-Standard

Termination, all assets and liabilities of the terminated

Pension Plans ‘will be transferred and delivered to the

PBGC as a statutory trustee of the terminated pension

plans.’ ” See Pls.’ First Am. Compl. 4 50 (quoting CSA

§ 12.1).

Even accepting plaintiffs' allegations as true, Pichin's

fiduciary duties as an alleged section 1342 trustee do not

extend to Pichin's obligations when acting in the capacity

of a settlor. The Supreme Court has held that “[pjlan

sponsors who alter the terms of a plan do not fall into the

category of fiduciaries.” Lockheed Corp. v. Spink, 517 U.S.

882, 890, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996).

Furthermore, “ ‘[e)mployers or other plan sponsors are

generally free under ERISA, for any reason at any time, to

adopt, modify, or terminate {a plan].’ ” Id. (emphasis

added) (quoting Curtiss-Wright Corp. v. Schoonejongen,

App. 17

514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995))

(citing Adams v. Avondale Industries, 905 F.2d 943, 947

(6th Cir.1990)). “When employers [or other plan sponsors}

undertake those actions, they do not act as fiduciaries, but

are analogous to the settlors of a trust.” See Lockheed, 517

U.S. at 890, 116 S.Ct. 1783 (citations omitted) (citing

Curtiss-Wright, 514 U.S. at 78, 115 S.Ct. 1223 and

Johnson v. Georgia-Pacific Corp., 19 F.3d 1184, 1188 (7th

Cir.1994)).

In the case at bar Pichin acted not as a fiduciary but as a

settlor when it requested that the PBGC terminate the

pension plans. When acting in this fashion, Pichin's

decisions are not subject to ERISA's fiduciary provisions

and thus, Pichin's procurement of the termination cannot be

the basis for a claim of fiduciary breach.

Finally, the court will address plaintiffs’ third claim that the

PBGC should be disqualified as the trustee of the Pilots' A-

Plan due to the PBGC's conflicting role as both plan trustee

and statutory guarantor. Plaintiffs argue that an independent

trustee in the PBGC's position would file suit against the

PBGC for breaching its fiduciary duty to protect the

interest of the plan participants. Yet, the plaintiffs’ main

grounds for removal is thdt the PBGC “will not seek to

recover from the Icahn entities any termination liability in

excess of the payments set forth in the CSA.” See Pls.'

Resp. to Def. Pichin's Mot. Dismiss at 24. Essentially,

plaintiffs ask this court to disqualify PBGC as plan trustee

for breach of fiduciary duty based upon the PBGC's failure

to collect the full amount of unfunded benefits.

Having already found the D.C. Circuit's holding that the

BGC was authorized to enter into the CSA as binding

App. }4

precedent, plaintiffs are barred from challenging PBGC's

actions taken in compliance with the CSA. Moreover,

plaintiffs’ claim that an independent trustee should be

appointed to resolve the PBGC's conflict of interest should

have been raised in the bankruptcy court proceedings and

in the Allied Pilots \itigation.FN8 Accordingly, it is res

judicata here.FN9

FN8. ALPA was a party to TWA's bankmptcy proceedings

and the Air Line Pilots Ass'n litigation. See Allied Pilots,

334 F.3d at 97. Plaintiffs concede that “TWA's Pilots,

including the plaintiffs and the members of the Plaintiff

Class, were represented for collective bargaining purposes

by the Air Line Pilots Association, International (ALPA).”

See Pls.’ First Am. Compl. 23. Courts have recognized

that unions are in privity with their membership for the

purposes of res judicata. See Monahan v. New York City

Dept. of Corrections, 214 F.3d 275, 285 (2nd Cir.2000)

(finding that officers were in privity with the sole and

exclusive collective bargaining representative who had

brought a prior action challenging the same policy).

FN9. Plaintiffs cite Harris v. Secretary, U.S. Dep't of

Veterans Affairs, 126 F.3d 339, 345 (D.C.Cir.1997) for the

proposition that in order for defendants to raise res judicata,

it must first be raised in a responsive pleading. However,

the D.C. Circuit has since held that affirmative defenses

may be raised in a pre-answer motion as in the case at bar.

See Smith-Haynie v. District of Columbia, 155 F.3d 575,

578 (D.C.Cir.1998) (explaining that “[t}he precise holding

of Harris is that an affirmative defense not raised by

answer cannot be raised in dispositive motions that are filed

post-answer ”) (emphasis added).

App. 19

V. CONCLUSION

For the reasons stated above, the Court shall GRANT

defendants' motions to dismiss. The Plaintiffs’ First

Amended Complaint shall be dismissed with prejudice.

The_ Court will issue a separate order consistent with this

opinion.

ORDER

Upon consideration of defendants’ motions to dismiss [# 51

and # 52] Plaintiffs' First Amended Complaint, the

Opposition to the motions, and reply thereto, the applicable

law, and for the reasons set forth in the accompanying

Memorandum Opinion issued this date, it is hereby

ORDERED that defendants' motions to dismiss are

GRANTED, and it is further

ORDERED that Plaintiffs’ First Amended Complaint is

hereby dismissed with prejudice.

App. 20

29 U.S.C. § 1302. Pension Benefit Guaranty

Corporation

(a) Establishment within Department of Labor

There is established within the Department of Labor a body

corporate to be known as the Pension Benefit Guaranty

Corporation. In carrying out its functions under this

subchapter, the corporation shall be administered by the

chairman of the board of directors in accordance with

policies established by the board. The purposes of this

subchapter, which are to be carried out by the corporation,

are—

(1) to encourage the continuation and maintenance of

voluntary private pension plans for the benefit of their

participants,

(2) to provide for the timely and uninterrupted payment

of pension benefits to participants and beneficiaries under

plans to which this subchapter applies, and

(3) to maintain premiums established by the corporation

under section 1306 of this title at the lowest level consistent

with carrying out its obligations under this subchapter.

(b) Powers of corporation

To carry out the purposes of this subchapter, the

corporation has the powers conferred on a nonprofit

corporation under the District of Columbia Nonprofit

Corporation Act [D.C.Code, § 29-501 et seg.) and, in

addition to any specific power granted to the corporation

elsewhere in this subchapter or under that Act, the

corporation has the power—

App. 21

(1) to sue and be sued, complain and defend, in its

corporate name and through its own counsel, in any court,

State or Federal; ;

(2) to adopt, alter, and use a corporate seal, which shall

be judicially noticed;

(3) to adopt, amend, and repeal, by the board of

directors, bylaws, rules, and regulations relating to the

conduct of its business and the exercise of all other rights

and powers granted to it by this chapter and such other

bylaws, rules, and regulations as may be necessary to carry

out the purposes of this subchapter;

(4) to conduct its business (including the carrying on of

operations and the maintenance of offices) and to exercise

all other nghts and powers granted to it by this chapter in

any State or other jurisdiction without regard to

qualification, licensing, or other requirements imposed by

law in such State or other jurisdiction;

(5) to lease, purchase, accept gifts or donations of, or

otherwise to acquire, to own, hold, improve, use, or

otherwise deal in or with, and to sell, convey, mortgage,

pledge, lease, exchange, or otherwise dispose of, any

property, real, personal, or mixed, or any interest therein

wherever situated;

(6) to appoint and fix the compensation of such officers,

attomeys, employees, and agents as may be required, to

determine their qualifications, to define their duties, and, to

the extent desired by the corporation, require bonds for

them and fix the penalty thereof, and to appoint and fix the

compensation of experts and consultants in accordance

with the provisions of section 3109 of Title 5;

(7) to utilize the personnel and facilities of any other

agency or department of the United States Government,

with or without reimbursement, with the consent of the

head of such agency or department; and

(8) to enter into contracts, to execute instruments, to

incur liabilities, and to do any and all other acts and things

App. 22

as may be necessary or incidental to the conduct of its

business and the exercise of all other rights and powers

granted to the corporation by this chapter.

(d) Board of directors; compensation; reimbursement for

expenses

The board of directors of the corporation consists of the

Secretary of the Treasury, the Secretary of Labor, and the

Secretary of Commerce. Members of the board shall serve

without compensation, but shall be reimbursed for travel,

subsistence, and other necessary expenses incurred in the

performance of their duties as members of the board. The

Secretary of Labor is the chairman of the board of

directors.

(e) Meetings

The board of directors shall meet at the call of its chairman,

or as otherwise provided by the bylaws of the corporation.

(f) Adoption of bylaws; amendment, alteration; publication

in the Federal Register

As soon as practicable, but not later than 180 days after

September 2, 1974, the board of directors shall adopt initial

bylaws and rules relating to the conduct of the business of

the corporation. Thereafter, the board of directors may

alter, supplement, or repeal any existing bylaw or rule, and

may adopt additional bylaws and rules from time to time as

_may be necessary. The chairman of the board shall cause a

copy of the bylaws of the corporation to be published in the

Federal Register not less often than once each year.

App. 23

(g) Exemption from taxation

(1) The corporation, its property, its franchise, capital,

reserves, surplus, and its income (including, but not limited

to, any income of any fund established under section 1305

of this title), shall be exempt from all taxation now or

hereafter imposed by the United States (other than taxes

imposed under chapter 21 of Title 26, relating to Federal

Insurance Contributions Act [26 U.S.C.A. § 3101 et seq.],

and chapter 23 of Title 26, relating to Federal

Unemployment Tax Act [26 U.S.C.A. § 3301 et seq.]), or

by any State or local taxing authority, except that any real

property and any tangible personal property (other than

cash and securities) of the corporation shall be subject to

State and local taxation to the same extent according to its

value as other real and tangible personal property is taxed.

(2) The receipts and disbursements of the corporation in

the discharge of its functions shall be included in the totals

of the budget of the United States Government. The United

States is not liable for any obligation or liability incurred by

the corporation.

(h) Advisory committee to corporation

(1) There is established ai: advisory committee to the

corporation, for the purpose of advising the corporation as

to its policies and procedures relating to (A) the

appointment of trustees in termination proceedings, (B)

investment of moneys, (C) whether plans being terminated

should be liquidated immediately or continued in operation

under a trustee, and (D) such other issues as the corporation

may request from time to time. The advisory committee

may also recommend persons for appointment as trustees in

termination proceedings, make recommendations with

respect to the investment of moneys in the funds, and

advise the corporation as to whether a plan subject to being

App. 24

terminated should be liquidated immediately or continued

in operation under a trustee.

(2) The advisory committee consists of seven members

appointed, from among individuals recommended by the

board of directors, by the President. Of the seven members,

two shall represent the interests of employee organizations,

two shall represent the interests of employers who maintain

pension plans, and three shall represent the interests of the

general public. The President shall designate one member

as chairman at the time of the appointment of that member.

(3) Members shall serve for terms of 3 years each,

except that, of the members first appointed, one of the

members representing the interests of employee

organizations, one of the members representing the

interests of employers, and one of the members

representing the interests of the general public shall be

appointed for terms of 2 years each, one of the members

representing the interests of the general public shall be

appointed for a term of | year, and the other members shall

be appointed to full 3-year terms. The advisory committee

shall meet at least six times each year and at such other

times as may be determined by the chairman or requested

by any three members of the advisory committee.

(4) Members shall be chosen on the basis of their

experience with employee organizations, with employers

who maintain pension plans, with the administration of

pension plans, or otherwise on account of outstanding

demonstrated ability in related fields. Of the members

serving on the advisory committee at any time, no more

than four shall be affiliated with the same political party.

(5) An individual appointed to fill a vacancy occurring

other than by the expiration of a term of office shall be

appointed only for the unexpired term of the member he

succeeds. Any vacancy occurring in the office of a member

of the advisory committee shall be filled in the manner in

which that office was originally filled.

App. 25

(6) The advisory committee shall appoint and fix the

compensation of such employees as it determines necessary

to discharge its duties, including experts and consultants in

accordance with the provisions of section 3109 of Title 5.

The corporation shall furnish to the advisory committee

such professional, secretarial, and other services as the

committee may request.

(7) Members of the advisory committee shall, for each

day (including traveltime) during which they are attending

meetings or conferences of the committee or otherwise

engaged in the business of the committee, be compensated

at a rate fixed by the corporation which is not in excess of

the daily equivalent of the annual rate of basic pay in effect

for grade GS-18 of the General Schedule, and while away

from their homes or regular places of business they may be

allowed travel expenses, including per diem in lieu of

subsistence, as authorized by section 5703 of Title 5.

(8) The Federal Advisory Committee Act does not

apply to the advisory committee established by this

subsection.

(i) Special rules regarding disasters, etc.

In the case of a pension or other employee benefit

plan, or any sponsor, administrator, participant, beneficiary,

or other person with respect to such plan, affected by a

Presidentially declared disaster (as defined in section

1033(h)(3) of Title 26) or a terroristic or military action (as

defined in section 692(c)(2) of Title 26), the corporation

may, notwithstanding any other provision of law, prescribe,

by notice or otherwise, a period of up to 1 year which may

be disregarded in determining the date by which any action

is required or permitted to be completed under this chapter.

No plan shall be treated as failing to be operated in

accordance with the terms of the plan solely as the result of

disregarding any period by reason of the preceding

sentence.

App. 26

29 U.S.C. § 1341. Termination of single-employer plans

(a) General rules governing § single-employer plan

terminations

(1) Exclusive means of plan termination

Except in the case of a termination for which

proceedings are otherwise instituted by the corporation as

provided in section 1342 of this title, a single-employer

plan may be terminated only in a standard termination

under subsection (b) of this section or a distress termination

under subsection (c) of this section.

(2) 60-day notice of intent to terminate

Not less than 60 days before the proposed termination

date of a standard termination under subsection (b) of this

section or a distress termination under subsection (c) of this

section, the plan administrator shall provide to each

affected party (other than the corporation in the case of a

standard termination) a written notice of intent to terminate

stating that such termination is intended and the proposed

termination dais. The written notice shall include any

related additional information required in regulations of the

corporation.

(3) Adherence to collective bargaining agreements

The corporation shall not proceed with a termination of

a plan under this section if the termination would violate

the terms and conditions of an existing collective

bargaining agreement. Nothing in the preceding sentence

shall be construed as limiting the authority of the

corporation to institute proceedings to involuntarily

terminate a plan under section 1342 of this title.

App. 27

(b) Standard termination of single-employer plans

(1) General requirements

A single-employer plan may terminate under a standard

termination only if—

(A) the plan administrator provides the 60-day

advance notice of intent to terminate to affected parties

required under subsection (a)(2) of this section,

(B) the requirements of subparagraphs (A) and (B)

of paragraph (2) are met,

noncompliance under subparagraph (C) of paragraph (2),

and

(D) when the final distribution of assets occurs, the

plan is sufficient for benefit liabilities (determined as of the

termination date).

(2) Termination procedure

(A) Notice to the corporation

As soon as practicable after the date on which the

notice of intent to terminate is provided pursuant to

subsection (a)(2) of this section, the plan administrator

shall send a notice to the corporation setting forth--

(i) certification by an enrolled actuary—

(I) of the projected amount of the assets of

the plan (as of a proposed date of final distribution of

assets),

(ID) of the actuarial present value (as of such

date) of the benefit liabilities (determined as of the

proposed termination date) under the plan, and

App. 28

(IID) that the plan is projected to be sufficient

(as of such proposed date of final distribution) for such

benefit liabilities,

(ii) such information as the corporation may

prescribe in regulations as necessary to enable the

corporation to make determinations under subparagraph

(C), and

(iii) certification by the plan administrator

that—

(1) the information on which the enrolled

actuary based the certification under clause (i) is accurate

and complete, and

(If) the information provided to _ the

corporation under clause (ii) is accurate and complete.

Clause (i) and clause (iii)(I) shall not apply to a plan

described in section 412(i) of Title 26.

(B) Notice to participants and beneficiaries of

benefit commitments [FN 1]

No later than the date on which a notice is sent by

the plan administrator under subparagraph (A), the plan

administrator shall send a notice to each person who is a

participant or beneficiary under the plan—

(i) specifying the amount of the benefit

liabilities (if any) attributable to such person as of the

proposed termination date and the benefit form on the basis

of which such.amount is determined, and

(ii) including the following information used in

determining such benefit liabilities:

(I) the length of service,

App. 29

(ID) the age of the participant or beneficiary,

(IIT) wages,

(IV) the assumptions, including the interest

rate, and

(V) such other information as_ the

corporation may require.

Such notice shall be written in such manner as is likely to

be understood by the participant or beneficiary and as may

be prescribed in regulations of the corporation.

(i) In general

Within 60 days after receipt of the notice under

subparagraph (A), the corporation shall issue a notice of

noncompliance to the plan administrator if—

(I) it determines, based on the notice sent

under paragraph (2)(A) of subsection (b) of this section,

that there is reason to believe that the plan is not sufficient

for benefit liabilities,

(II) it otherwise determines, on the basis of

information provided by affected parties or otherwise

obtained by the corporation, that there is reason to believe

that the plan is not sufficient for benefit liabilities, or

(IIT) it determines that any other requirement

of subparagraph (A) or (B) of this paragraph or of

subsection (a)(2) of this section has not been met, unless it

further determines that the issuance of such notice would

be inconsistent with the interests of participants and

beneficiaries.

(ii) Extension

The corporation and the plan administrator may

agree to extend the 60-day period referred to in clause (i)

App. 30

by a written agreement signed by the corporation and the

plan administrator before the expiration of the 60-day

period. The 60-day period shall be extended as provided in

the agreement and may be further extended by subsequent

written agreements signed by the corporation and the plan

administrator made before the expiration of a previously

agreed upon extension of the 60-day period. Any extension

may be made upon such terms and conditions (including

the payment of benefits) as are agreed upon by the

corporation and the plan administrator.

(D) Final distribution of assets in absence of notice

of noncompliance

The plan administrator shall commence the final

distribution of assets pursuant to the standard termination

of the plan as soon as practicable after the expiration of the

60-day (or extended) period referred to in subparagraph

(C), but such final distribution may occur only if—

(i) the plan administrator has not received

during such period a notice of noncompliance from the

corporation under subparagraph (C), and

(ii) when such final distribution occurs, the plan

is sufficient for benefit liabilities (determined as of the

termination date).

(3) Methods of final distribution of assets

(A) in general

In connection with any final distribution of assets

pursuant to the standard termination of the plan under this

subsection, the plan administrator shall distribute the assets

in accordance with section 1344 of this title. In distributing

such assets, the plan administrator shall—

App. 31

(i) purchase irrevocable commitments from an

insurer to provide all benefit liabilities under the plan, or

(ii) in accordance with the provisions of the plan

and any applicable regulations, otherwise fully provide all

benefit liabilities under the plan. A transfer of assets to the

corporation in accordance with section 1350 of this title on

behalf of a missing participant shall satisfy this

subparagraph with respect to such participant.

(B) Certification to the corporation of final

distribution of assets

Within 30 days after the final distribution of assets

is completed pursuant to the standard termination of the

plan under this subsection, the plan administrator shall send

a notice to the corporation certifying that the assets of the

plan have been distributed in accordance with the

provisions of subparagraph (A) so as to pay all benefit

liabilities under the plan.

(4) Continuing authority

Nothing in this section shall be construed to preclude

the continued exercise by the corporation, after the

termination date of a plan terminated in a standard

termination under this subsection, of its authority under

section 1303 of this title with respect to matters relating to

the termination. A certification under paragraph (3)(B)

shall not affect the corporation's obligations under section

1322 of this title.

(1) In general

A single-employer plan may terminate under a distress

termination only if--

App. 32

(A) the plan administrator provides the 60-day

advance notice of intent to terminate to affected parties

required under subsection (a)(2) of this section,

(B) the requirements of subparagraph (A) of

paragraph (2) are met, and

of subparagraph (B) of paragraph (2) are met.

(2) Termination requirements

(A) Information submitted to the corporation

As soon as practicable after the date on which the

notice of intent to terminate is provided pursuant to

subsection (a)(2) of this section, the plan administrator

shall provide the corporation, in such form as may be

prescribed by the corporation in ie aera the following

information:

(i) such information as the corporation may

prescribe by regulation as necessary to make

determinations under subparagraph (B) and paragraph (3);

(ii) unless the corporation determines the

information is not necessary for purposes of paragraph

(3)(A) or section 1362 of this title, certification by an

enrolled actuary of—

(I) the amount (as of the proposed

termination date and, if applicable, the proposed

distribution date) of the current value of the assets of the

plan,

(II) the actuarial present value (as of such

dates) of the benefit liabilities under the plan,

(III) whether the plan is sufficient for benefit

liabilities as of such dates,

App. 33

(IV) the actuarial present value (as of such

dates) of benefits under the plan guaranteed under section

1322 of this title, and

(V) whether the plan is safficient for

guaranteed benefits as of such dates;

(iii) in any case in which the plan is not

sufficient for benefit liabilities as of such date--

(I) the name and address of each participant

and beneficiary under the plan as of such date, and

(11) such other information as shall be ~

prescribed by the corporation by regulation as necessary to

enable the corporation to be able to make payments to

participants and beneficiaries as required under section

1322(c) of this title; and

(iv) certification by the plan administrator

that—

(I) the information on which the enrolled

actuary based the certifications under clause (ii) is accurate

and complete, and

(I) the information provided to the

corporation under clauses (i) and (iii) is accurate and

complete.

Clause (ii) and clause (iv)(I) shall not apply to a plan

described in section 412(i) of Title 26.

(B) Determination by the corporation of necessary

distress criteria

Upon receipt of the notice of intent to terminate

required under subsection (a)(2) of this section and the

information required under subparagraph (A), the

corporation shail determine whether the requirements of

this subparagraph are met as provided in clause (i), (ii), or

(iii). The requirements of this subparagraph are met if each

App. 34

person who is (as of the proposed termination date) a

contributing sponsor of such plan or a member of such

sponsor's controlled group meets the requirements of any of

the following clauses:

(i) Liquidation in bankruptcy or insolvency

proceedings

The requirements of this clause are met by a

person if--

(I) such person has filed or has had filed

against such person, as of the proposed termination date, a

petition seeking liquidation in a case under Title 11 or

under any similar Federal law or law of a State or political

subdivision of a State (or a case described in clause (ii)

filed by or against such person has been converted, as of

such date, to a case in which liquidation is sought), and

(Il) such case has not, as of the proposed

termination date, been dismissed.

(11) Reorganization in bankruptcy or insolvency

proceedings

The requirements of this clause are met by a

person if--

(I) such person has filed, or has had filed

against such person, as of the proposed termination date, a

petition seeking reorganization in a case under Title 11 or

under any similar law of a State or political subdivision of a

State (or a case described in clause (i) filed by or against

such person has been converted, as of such date, to such a

case in which reorganization is sought),

(II) such case has not, as of the proposed

termination date, been dismissed,

(III) such person timely submits to the

corporation any request for the approval of the bankruptcy

App. 35

court (or other appropriate court in a case under such

similar law of a State or political subdivision) of the plan

termination, and

(IV) the bankruptcy court (or such other

appropriate court) determines that, unless the plan is

terminated, such person will be unable to pay all its debts

pursuant to a plan of reorganization and will be unable to

continue in business outside the chapter 11 reorganization

process and approves the termination.

(111) Termination required to enable payment of

debts while staying in business or to avoid unreasonably

burdensome pension costs caused by declining workforce

The requirements of this clause are met by a

person if such person demonstrates to the satisfaction of the

corporation that--

(I) unless a distress termination occurs, such

person will be unable to pay such person's debts when due

and wiil be unable to continue in business, or

(II) the costs of providing pension coverage

have become unreasonably burdensome to such person,

solely as a result of a decline of such person's workforce

covered as participants under all single-employer plans of

which such person ts a contributing sponsor.

corporation

The corporation shall notify the plan administrator

as soon as practicable of its determinations made pursuant

to subparagraph (B).

(3) Termination procedure

App. 36

(A) Determinations by the corporation relating to

plan sufficiency for guaranteed benefits and for benefit

liabilities

If the corporation determines that the requirements

for a distress termination set forth in paragraphs (1) and (2)

are met, the corporation shall—

(1) determine that the plan is sufficient for

guaranteed benefits (as of the termination date) or that the

corporation is unable to make such determination on the

basis of information made available to the corporation,

(ii) determine that the plan is sufficient for

benefit liabilities (as of the termination date) or that the

corporation is unable to make such determination on the

basis of information made available to the corporation, and

(iii) notify the plan administrator of the

determinations made pursuant to this subparagraph as soon

as practicable.

(B) Implementation of termination

After the corporation notifies the plan administrator

ef its determinations under subparagraph (A), the

termination of the plan shall be carried out as soon as

practicable, as provided in clause (1), (ii), or (iii).

(i) Cases of sufficiency for benefit liabilities

In any case in which the corporation determines

that the plan is sufficient for benefit liabilities, the plan

administrator shall proceed to distribute the plan's assets,

and make certification to the corporation with respect to

such distribution, in the manner described in subsection

(b)(3) of this section, and shall take such other actions as

may be appropriate to carry out the termination of the plan.

App. 37

(ii) Cases of sufficiency for guaranteed benefits

without a finding of sufficiency for benefit liabilities

In any case in which the corporation determines

that the plan is sufficient for guaranteed benefits, but

further determines that it is unable to determine that the

plan is sufficient for benefit liabilities on the basis of the

information made available to it, the plan administrator

shall proceed to distribute the plan's assets in the manner

described in subsection (b)(3) of this section, make

certification to the corporation that the distribution has

occurred, and take such actions as may be appropriate to

carry out the termination of the plan.

(iii) Cases without any finding of sufficiency

In any case in which the corporation determines

that it is unable to determine that the plan is sufficient for

guaranteed benefits on the basis of the information made

available to it, the corporation shall commence proceedings

in accordance with section 1342 of this title.

termination that plan is unable to pay benefits

(i) Finding with respect to benefit liabilities

which are not guaranteed benefits

If, after the plan administrator has begun to

terminate the plan as authorized under subparagraph (B)(i),

the plan administrator finds that the plan is unable, or will

be unable, to pay benefit liabilities which are not benefits

guaranteed by the corporation under section 1322 of this

title, the plan administrator shall notify the corporation of

such finding as soon as practicable thereafter.

App. 38

(ii) Finding with respect to guaranteed benefits

If, after the plan administrator has begun to

terminate the plan as authorized by subparagraph (B)(i) or

(11), the plan administrator finds that the plan is unable, or

will be unable, to pay all benefits under the plan which are

guaranteed by the corporation under section 1322 of this

title, the plan administrator shall notify the corporation of

such finding as soon as practicable thereafter. If the

corporation concurs in the finding of the plan administrator

(or the corporation itself makes such a finding), the

corporation shall institute appropriate proceedings under

section 1342 of this title.

(D) Administration of the plan during interim

period

(i) In general

The plan administrator shall—

(1) meet the requirements of clause (ii) for

the period commencing on the date on which the plan

administrator provides a notice of distress termination to

the corporation under subsection (a)(2) of this section and

ending on the date on which the plan administrator receives

notification from the corporation of its determinations

under subparagraph (A), and

(II) meet the requirements of clause (ii)

commencing on the date on which the plan administrator or

the corporation makes a finding under subparagraph (C)(i1).

(ii) Requirements

The requirements of this clause are met by the

plan administrator if the plan administrator—

App. 39

_(D) refrains from distributing assets or taking

any other actions to carry out the proposed termination

under this subsection,

(II) pays benefits attributable to employer

contributions, other than death benefits, only in the form of

an annuity,

(If) does not use plan assets to purchase

irrevocable commitments to provide benefits from an

insurer, and

(IV) continues to pay all benefit liabilities

under the plan, but, commencing on the proposed

termination date, limits the payment of benefits under the

plan to those benefits which are guaranteed by the

corporation under section 1322 of this title or to which

assets are required to be allocated under section 1344 of

this title.

In the event the plan administrator is later determined not to

have met the requirements for distress termination, any

benefits which are not paid solely by reason of compliance

with subclause (IV) shall be due and payable immediately

(together with interest, at a reasonable rate, in accordance

with regulations of the corporation).

(d) Sufficiency

For purposes of this section--

(1) Sufficiency for benefit liabilities

A single-employer plan is sufficient for benefit

liab..ies if there is no amount of unfunded benefit

liabilities under the plan.

(2) Sufficiency for guaranteed benefits

App. 40

A single-employer plan is sufficient for guaranteed

benefits if there is no amount of unfunded guaranteed

benefits under the plan.

(e) Limitation on the conversion of a defined benefit plan to

a defined contribution plan

The adoption of an amendment to a plan which causes the

plan to become a plan described in section 1321(b)(1) of

this title constitutes a termination of the plan. Such an

amendment may take effect only after the plan satisfies the

requirements for standard termination under subsection (b)

of this section or distress termination under subsection (c)

of this section.

29 U.S.C. § 1342. Institution of termination proceedings

by the corporation

(a) Authority to institute proceedings to terminate a plan

The corporation may institute proceedings under this

section to terminate a plan whenever it determines that—

(1) the plan has not met the minimum funding standard

required under section 412 of Title 26, or has been notified

by the Secretary of the Treasury that a notice of deficiency

under section 6212 of Title 26 has been mailed with respect

to the tax imposed under section 497 1(a) of Title 26,

(2) the plan will be unable to pay benefits when due,

(3) the reportable event described in section 1343(c)(7)

of this title has occurred, or

(4) the possible long-run loss of the corporation with

respect to the plan may reasonably be expected to increase

unreasonably if the plan is not terminated.

The corporation shall as soon as practicable institute

App. 41

proceedings under this section to terminate a single-

employer plan whenever the corporation determines that

the plan does not have assets available to pay benefits

which are currently due under the terms of the plan. The

corporation may prescribe a simplified procedure to follow

in terminating small plans as long as that procedure

includes substantial . “ards for the rights of the

participants and benefi.iacaes under the plans, and for the

employers who maintain such plans (including the

requirement for a court decree under subsection (c) of this

section). Notwithstanding any other provision of this

subchapter, the corporation is authorized to poo! assets of

terminated plans for purposes of administration,

investment, payment of liabilities of all such terminated

plans, and such other purposes as it determines to be

appropriate in the administration of this subchapter.

(b) Appointment of trustee

(1) Whenever the corporation makes a determination

under subsection (a) of this section with respect to a plan or

is required under subsection (a) of this section to institute

proceedings under this section, it may, upon notice to the

plan, apply to the appropriate United States district court

for the appointment of a trustee to administer the plan with

respect to which the determination is made pending the

issuance of a decree under subsection (c) of this section

ordering the termination of the plan. If within 3 business

days after the filing of an application under this subsection,

or such other period as the court may order, the

administrator of the plan consents to the appointment of a

trustee, or fails to show why a trustee should not be

appointed, the court may grant the application and appoint

a trustee to administer the plan in accordance with its terms

until the corporation determines that the plan should be

terminated or that termination is unnecessary. The

App. 42

corporation may request that it be appointed as trustee of a

plan in any case.

(2) Notwithstanding any other provision of this

subchapter—

(A) upon the petition of a plan administrator or the

corporation, the appropriate United States district court

may appoint a trustee in accordance with the provisions of

this section if the interests of the plan participants would be

better served by the appointment of the trustee, and

(B) upon the -petition of the corporation, the

appropriate United States district court shall appoint a

trustee proposeu by the corporation for a multiemployer

plan which is in reorganization or to which section

134la(dy of this title applies, unless such appointment

would be adverse to the interests of the plan participants

and beneficiaries in the aggregate.

(3) The corporation and plan administrator may

agree to the appointment of a trustee without proceeding in

accordance with the requirements of paragraphs (1) and (2).

If the corporation is required under subsection (a) of this

section to commence proceedings under this section with

respect to a plan or, after issuing a notice under this section

to a plan administrator, has determined that the plan should

be terminated, it may, upon notice to the plan administrator,

apply to the appropriate United States district court for a

decree adjudicating that the plan must be terminated in

order to protect the interests of the participants or to avoid

any unreasonable deterioration of the financial condition of

the plan or any unreasonable increase in the liability of the

fund. If the trustee appointed under subsection (b) of this

App. 43

section disagrees with the determination of the corporation

under the preceding sentence he may intervene in the

proceeding relating to the application for the decree, or

make appiication for such decree himself. Upon granting a

decree for which the corporation or trustee has applied

under this subsection the court shall authorize the trustee

appointed under subsection (b) of this section (or appoint a

trustee if one has not been appointed under such subsection

and authorize him) to terminate the plan in accordance with

the provisions of this subtitle. If the corporation and the

plan administrator agree that a plan should be terminated

and agree to the appointment of a trustee without

proceeding in accordance with the requirements of this

subsection (other than this sentence) the trustee shall have

the power described in subsection (d)(1) of this section and,

in addition to any other duties imposed on the trustee under

law or by agreement between the corporation and the plan

administrator, the trustee is subject to the duties described

in subsection (d)(3) of this section. Whenever a trustee

appointed under this subchapter is operating a plan with

discretion as to the date upon which final distribution of the

assets is to be commenced, the trustee shall notify the

corporation at least 10 days before the date on which he

proposes to commence such distribution.

(3) In the case of a proceeding initiated under this

section, the plan administrator shall provide the

corporation, upon the request of the corporation, the

information described in clauses (ii), (iii), and (iv) of

section 1341(c)(2)(A) of this title.

(d) Powers of trustee

(1)(A) A trustee appointed under subsection (b) of this

section shall have the power--

App. 44

(3) to do any act authorized by the plan or this

subchapter to be done by the plan administrator or any

trustee of the plan;

(ii) to require the transfer of all (or any part) of

the assets and records of the plan to himself as trustee;

(iii) to invest any assets of the plan which he

holds in accordance with the provisions of the plan,

regulations of the corporation, and applicable rules of law;

(iv) to limit payment of benefits under the plan

to basic benefits or to continue payment of some or all of

the benefits which were being paid prior to his

appointment;

(v) in the case of a multiemployer plan, to

reduce benefits or suspend benefit payments under the plan,

give appropriate notices, amend the plan, and perform other

acts required or authorized by subtitle (FE) of this

subchapter to be performed by the plan sponsor or

administrator;

(vi) to do such other acts as he deems necessary

to continue operation of the plan without increasing the

potential liability of the corporation, if such acts may be

done under the provisions of the plan; and

(vii) to require the plan sponsor, the plan

administrator, any contributing or withdrawn employer, and

any employee organization representing plan participants to

furnish any information with respect to the plan which the

trustee may reasonably need in order to administer the plan.

If the court to which application is made under

subsection (c) of this section dismisses the application with

prejudice, or if the corporation fails to apply for a decree

under subsection (c) of this section, within 30 days after the

date on which the trustee is appointed under subsection (b)

of this section, the trustee shall transfer all assets and

records of the plan held by him to the plan administrator

within 3 business days after such dismissal or the

App. 45

expiration of such 30-day period, and shall not be liable to

the plan or any other person for his acts as trustee except

for willful misconduct, or for conduct in violation of the

provisions of part 4 of subtitle B of subchapter I of this

this section). The 30-day period referred to in this

subparagraph may be extended as provided by agreement

between the plan administrator and the corporation or by

court order obtained by the corporation.

(B) If the court to which an application is made

under subsection (c) of this section issues the decree

requested in such application, in addition to the powers

described in subparagraph (A), the trustee shall have the

power—

(i) to pay benefits under the plan in accordance

with the requirements of this subchapter;

(ii) to collect for the plan any amounts due the

plan, including but not limited to the power to collect from

the persons obligated to meet the requirements of section

1082 of this title or the terms of the plan;

(ili) to receive any payment made by the

corporation to the plan under this subchapter;

(iv) to commence, prosecute, or defend on

behalf of the plan any suit or proceeding involving the plan;

(v) to issue, publish, or file such notices,

statements, and reports as may be required by the

corporation or any order of the court;

(vi) to liquidate the plan assets;

(vii) to recover payments under section 1345(a)

of this title; and

(viii) to do such other acts as may be necessary

to comply with this subchapter or any order of the court

and to protect the interests of plan participants and

beneficiaries.

App. 46

(2) As soon as practicable after his appointment, the

trustee shall give notice to interested parties of the

institution of proceedings under this subchapter to

determine whether the plan should be terminated or to

terminate the plan, whichever is applicable. For purposes of

this paragraph, the term "interested party" means—

(A) the plan administrator,

(B) each participant in the plan and each beneficiary

of a deceased participant,

under section 1362, 1363, or 1364 of this title,

(D) each employer who is or may be liable to the

plan under section part | of subtitle E of this subchapter,

(E) each employer who has an obligation to

contribute, within the meaning of section 1392(a) of this

title, under a multiemployer plan, and

(F) each employee organization which, for purposes

of collective bargaining, represents plan participants

employed by an employer described in subparagraph (C),

(D), or (E).

(3) Except to the extent inconsistent with the provisions

of this chapter, or as may be otherwise ordered by the

court, a trustee appointed under this section shall be subject

to the same duties as those of a trustee under section 704 of

Title 11, and shall be, with respect to the plan, a fiduciary

within the meaning of paragraph (21) of section 1002 of

this title and under section 4975(e) of Title 26 (except to

the extent thut the provisions of this subchapter are

inconsistent with the requirements applicable under part 4

of subtitle B of subchapter I of this chapter and of such

section 4975).

(e) Filing of application notwithstanding pendency of other

proceedings

App. 47

An application by the corporation under this section

may be filed notwithstanding the pendency in the same or

any other court of any bankruptcy, mortgage foreclosure, or

equity receivership proceeding, or any proceeding to

reorganize, conserve, or liquidate such plan or its property,

or any proceeding to enforce a lien against property of the

plan.

(f) Exclusive jurisdiction; stay of other proceedings

Upon the filing of an application for the appointment of a

trustee or the issuance of a decree under this section, the

court to which an application is made shall have exclusive

jurisdiction of the plan involved and its property wherever

located with the powers, to the extent consistent with the

purposes of this section, of a court of the United States

having jurisdiction over cases under chapter 11 of Title 11.

Pending an adjudication under subsection (c) of this section

such court shall stay, and upon appointment by it of a

trustee, as provided in this section such court shall continue

the stay of, any pending mortgage foreclosure, equity

receivership, or other proceeding to reorganize, conserve,

or liquidate the plan or its property and any other suit

against any receiver, conservator, or trustee of the plan or

its property. Pending such adjudication and upon the -

appointment by it of such trustee, the court may stay any

proceeding to enforce a lien against property of the plan or

any other suit against the plan.

(g) Venue

An action under this subsection may be brought in the

judicial district where the plan administrator resides or does

business or where any asset of the plan is situated. A

district court in which such action is brought may issue

App. 48

process with respect to such action in any other judicial

district.

(h) Compensation of trustee and professional service

personnel appointed or retained by trustee

(1) The amount of compensation paid to each trustee

appointed under the provisions of this subchapter shall

require the prior approval of the corporation, and, in the

case of a trustee appointed by a court, the consent of that

court.

(2) Trustees shall appoint, retain, and compensate

accountants, actuaries, and other professional service

personnel in accordance with regulations prescribed by the

corporation.

29 U.S.C. § 1362. Liability for termination of single-

employer plans under a distress termination or a

termination by corporation

(a) In general

In any case in which a single-employer plan is terminated

in a distress termination under section 1341(c) of this title

or a termination otherwise instituted by the corporation

under section 1342 of this title, any person who is, on the

termination date, a contributing sponsor of the plan or a

member of such a contributing sponsor's controlled group

shall incur liability under this section. The liability under

this section of all such persons shall be joint and several.

The liability under this section consists of —

(1) liability to the corporation, to the extent provided in

subsection (b) of this section, and

App. 49

(2) liability to the trustee appointed under subsection

(b) or (c) of section 1342 of this title, to the extent provided

in subsection (c) of this section.

(b) Liability to corporation

(1} Amount of liability

(A) In general

Except as provided in subparagraph (B), the liability

to the corporation of a person described in subsection (a) of

this section shall be the total amount of the unfunded

benefit liabilities (as of the termination date) to all

participants and beneficiaries under the plan, together with

interest (at a reasonable rate) calculated from the

termination date in accordance with regulations prescribed

by the corporation.

(B) Special rule in case of subsequent insufficiency

For purposes of subparagraph (A), in any case

described in section 1341(c)(3)(C)(1i) of this title, actuarial

present values shall be determined as of the date of the

notice to the corporation (or the finding by the corporation)

described in such section.

(2) Payment of liability

(A) In general

Except as provided in subparagraph (B), the liability

to the corporation under this subsection shall be dué and

payable to the corporation as of the termination date, in

cash or securities acceptable to the corporation.

(B) Special rule

App. 50

Payment of so much of the liability under paragraph

(1)(A) as exceeds 30 percent of the collective net worth of

all persons described in subsection (a) of this section

(including interest) shall be made under commercially

reasonable terms prescribed by the corporation. The parties

involved shall make a reasonable effort to reach agreement

on such commercially reasonable terms. Any such terms

prescribed by the corporation shall provide for deferral of

50 percent of any amount of liability otherwise payable for

any year under this subparagraph if a person subject to such

liability demonstrates to the satisfaction of the corporation

that no person subject to such liability has any individual

pre-tax profits for such person's fiscal year ending during

such year.

(3) Alternative arrangements

The corporation and any person liable under this section

may agree to alternative arrangements for the satisfaction

of liability to the corporation under this subsection.

A person described in subsection (a) of this section shall be

subject to liability under this subsection to the trustee

appointed under subsection (b) or (c) of section 1342 of this

title. The liability of such person under this subsection shall

consist of—

(1) the outstanding balance of the accumulated funding

deficiencies (within the meaning of section 1082(a)(2) of

this title and section 412(a) of Title 26) of the plan (if any)

(which, for purposes of this subparagraph, shall include the

amount of any increase in such accumulated funding

deficiencies of the plan which would result if all pending

applications for waivers of the minimum funding standard

App. 51

under section 1083 of this title or section 412(d) of Title 26

and for extensions of the amortization period under section

1084 of this title or section 412(e) of Title 26 with respect

to such plan were denied and if no additional contributions

(other than those already made by the termination date)

were made for the plan year in which the termination date

occurs or for any previous plan year),

(2) the outstanding balance of the amount of waived

funding deficiencies of the plan waived before such date

under section 1083 of this title or section 412(d) of Title 26

(if any), and

(3) the outstanding balance of the amount of decreases

in the minimum funding standard allowed before such date

under section 1084 of this title or section 412(e) of Title 26

(if any), together with interest (at a reasonable rate)

calculated from the termination date in accordance with

regulations prescribed by the corporation. The liability

under this subsection shall be due and payable to such

trustee as of the termination date, in cash or securities

acceptable to such trustee.

(d) Definitions

(1) Collective net worth of persons subject to liability

(A) In general

The collective net worth of persons subject to

liability in connection with a plan termination consists of

the sum of the individual net worths of all persons who—

(i) have individual net worths which are greater

than zero, and

(ii) are (as of the termination date) contributing

sponsors of the terminated plan or members of their

controlled groups.

App. 52

(B) Determination of net worth

For purposes of this paragraph, the net worth of

a person is—

(i) determined on whatever basis best reflects, in

the determination of the corporation, the current status of

the person's operations and prospects at the time chosen for

determining the net worth of the person, and

(ii) increased by the amount of any transfers of

assets made by the person which are determined by the

corporation to be improper under the circumstances,

including any such transfers which would be inappropriate

under Title 11-if the person were a debtor in a case under

chapter 7 of such title.

For purposes of this paragraph, determinations of

net worth shall be made as of a day chosen by the

corporation (during the 120-day period ending with the

termination date) and shall be computed without regard to

any liability under this section.

(2) Pre-tax profits

The term "pre-tax profits" means—

(A) except as provided in subparagraph (B), for any

fiscal year of any person, such person's consolidated net

income (excluding any extraordinary charges to income

and including any extraordinary credits to income) for such

fiscal year, as shown on audited financial statements

prepared in accordance with generally accepted accounting

principles, or

App. 53

(B) for any fiscal year of an organization described

in section 5O1(c) of Title 26, the excess of income over

expenses (as such terms are defined for such organizations

under generally accepted accounting principles), before

provision for or deduction of Federal or other income tax,

any contribution to any single-employer plan of which such

person is a contributing sponsor at any time during the

period beginning on the termination date and ending with

the end of such fiscal year, and any amounts required to be

paid for such fiscal year under this section. The corporation

may by regulation require such information to be filed on

such forms as may be necessary to determine the existence

and amount of such pre-tax profits.

(e) Treatment of substantial cessation of operations

If an employer ceases operations at a facility in any

location and, as a result of such cessation of operations,

more than 20 percent of the total number of his employees

who are participants under a plan established and

maintained by him are separated from employment, the

employer shall be treated with respect to that plan as if he

were a substantial employer under a plan under which more

than one employer makes contributions and the provisions

of sections 1363, 1364, and 1365 of this title shall apply.

29 U.S.C.A. § 1367. Recovery of liability for plan

termination

The corporation is authorized to make arrangements with

contributing sponsors and members of their controlled

groups who are or may become liable under section 1362,

1363, ef 1364 of this title for payment of their liability,

inclucking arrangements for deferred payment of amounts of

liabitity «> the corporation accruing as of the termination

App. 54

date on such terms and for such periods as the corporation

deems equitable and appropriate.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.