Put Benefits Back, Orders Court in Visteon Bankruptcy Case

Ronald Groovy July-30-2010 No Comments »

As I continue to provide news relating to employment and bankruptcy here is my Bankruptcy in Indiana series, I’m constantly on the alert not only for news items about jobs, but also about groundbreaking court cases that can impact the lives of my readers and Indiana bankruptcy clients.

I’ve got all my colleagues and friends into the project as well. One of the Columbus bankruptcy lawyers who works in the Mark Zuckerberg bankruptcy law offices brought a recent court case to my attention that is a really “big deal”. As a debt consolidation lawyer offering bankruptcy services in Indiana, I can already name quite a number of people for whom this decision two weeks ago is going to make a huge difference.

According to Inside Indiana Business, the 3rd U.S. Circuit Court of Appeals has ruled that Visteon Corporation cannot terminate health and life insurance benefits for its 2,100 retirees in Indiana. This decision overturns rulings in lower courts. This new ruling affects retirees from the two former Visteon manufacturing plants in Connersville and in Bedford (these places are served by the Zuckerberg bankruptcy law offices in Bloomington and in Columbus, Indiana.)

By way of background, so you’ll better understand the decision, Visteon filed bankruptcy, and, as part of that bankruptcy plan, decided to end the retiree insurance benefits. The judges in the higher court ruled unanimously that Visteon acted illegally, because the bankruptcy code has important protections for retirees, and that those protections had not been honored, because the unions had not been given adequate chance to negotiate a way to preserve at least some of the benefits.

I’ve been a bankruptcy lawyer in Indiana for many, many years, and have often written here in Bankruptcy in Indiana about the fact that bankruptcy law is very careful to preserve both retirement plan savings (by making those savings exempt from creditors’ claims) and by protecting retirement pension benefits themselves by not allowing that income – or Social Security income – to be garnished.

Over the years I’ve handled tens of thousands of individual bankruptcies in Indiana, plus thousands of small business bankruptcy Indiana cases. One sad trend I’ve noticed is that more of the people coming to see me for Indiana bankruptcy help are older, meaning in their fifties all the up through the seventies. Don’t get me wrong – there are still a lot of single moms in their twenties and thirties, lots of couples and individuals in their forties, but it’s still noticeable that people who thought they were “on track” for a secure retirement are coming to see me because their plans are “off track”.

What all the good bankruptcy attorneys in Indiana who are my colleagues are seeing now is that all the hard work and the big plans were derailed when these clients lost their job, or when someone got sick in the family and lost the insurance. And now, imagine people who actually reached retirement, were promised certain benefits, and Boom! Those benefits are taken away suddenly with the bankruptcy of their former employer.

The Visteon case isn’t over – there will be arguments, and appeals, and negotiations. Meanwhile, I just keep talking to people whose plans got derailed through combinations of factors beyond their control. What I do is listen and talk and explain. Not always, but often nowadays, it takes the bankruptcy safety net to get retirement plans back on trac!

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