Yellow Corporation
MEMORANDUM OPINION SETTING FORTH PRELIMINARY OBSERVATIONS ON REMAINING MULTIEMPLOYER PENSION PLAN CLAIMS ALLOWANCE DISPUTES
TABLE OF CONTENTS
Prefatory observations in light of April 7 Status Conference ........................... 1
Introduction......................................................................................................... 6
Procedural background....................................................................................... 9
Jurisdiction........................................................................................................ 14
Analysis ............................................................................................................. 14
I. The debtors had not defaulted on their withdrawal liability obligations as of the petition date.......................................................... 14
II. The debtors’ 20-year stream of withdrawal liability payments were accelerated by virtue of the bankruptcy filing. ............................ 17
III. While it appears that
A. The calculation of the (up to) 20-year payment of withdrawal liability includes the payment of interest............... 20
B.
IV. Even if
A. Under Oakwood Homes, disallowance of unmatured interest is the Bankruptcy Code‘s method of present valuing future claims; when future payments include unmatured interest, no further present discounting is appropriate................................................................................... 33
B. Nothing in
by virtue of actuarial assumptions under ERISA should be disallowed under
C. Even for those plans whose claims are subject to the 20-year cap, withdrawal liability is calculated by dividing the total claim into principal and interest using normal principles of amortization (at the applicable interest rate) and disallowing the claim for unmatured interest under
V. The
A. The debtors’
B. This Court may grant partial summary judgment on a part of the debtors’
C.
D.
1. The text of
2. The debtors’ positions are not contrary to the law of the case.......................................................................... 58
VI. Central States and Local 641 used inappropriate contribution rates when calculating the debtors’ withdrawal liability..................... 60
VII. The liquidated damages provision contemplated in the 2014 letter agreement is an unenforceable penalty under Illinois law. ................................................................................................................. 64
Conclusion ......................................................................................................... 67
Prefatory observations in light of April 7 Status Conference
A word about the context of this unusual Memorandum Opinion is probably necessary. The most logical place to start is with this Court‘s March 31, 2025 Letter Opinion.1 In short, the debtors and MFN had filed objections to proofs of claim filed by various multiemployer pension plans.2 Various parties sought summary judgment on claims allowance issues. The Court heard argument on those motions on January 28, 2025 and was in the process of finalizing its opinion. Before the Court issued the opinion, however, the debtors and the Committee asked the Court to withhold the opinion.3 The reason was that they would be filing a joint plan (which they have since filed) under which they would settle those claims objections. Issuing the opinion, they argued, would massively disrupt the hard work of many parties in reaching that settlement. MFN, which had joined in the claims objections and was not part of the settlement, took the view that it was entitled to a resolution of its claims objections, and thus asked the Court to go ahead and issue its opinion.
What should a court do in that situation? That was the subject of the March 31 Letter Opinion, which addressed the correspondence received from the parties. The opinion addressed three different approaches courts had taken when a trustee or debtor-in-possession seeks to settle a claim to which another party in interest had objected. One line of cases suggests that a bankruptcy court can essentially ignore
the claim objection and simply resolve the motion under the typical, highly deferential standard applicable under
In its March 31 Letter Opinion, the Court concluded that the Kaiser Aluminum approach (under which a settlement could be approved so long as it fell anywhere within a range of reasonable settlements) was essentially foreclosed by subsequent precedent, and suggested that regardless of whether it would adopt the approach set out in C.P. Hall or the “goldilocks” approach suggested in DVR, it would make sense to issue its opinion so that the parties could move forward with an understanding of the Court‘s analysis of the issues that bear on claims allowance. But out of respect for the hard work of the parties in forging a settlement reflected in a proposed plan, the Court indicated that it would give the parties the opportunity to be heard on the issue at a status conference on April 7, 2025 before issuing the opinion.
That status conference was constructive. With respect to the ultimate standard the Court will apply to determine whether the settlements may be approved, the Court remains open to the suggestion set forth in the DVR opinion that
The Court also remains open to the analysis set out in C.P. Hall. Resolving that question is ultimately an issue for confirmation that need not be tackled today. But a meaningful point of consensus emerged during the April 7 status conference. In light of the Court‘s determination that it was going to apply meaningful scrutiny to the proposed settlement, which scrutiny would be informed by the conclusions the Court had reached on the summary judgment motions, all parties agreed that, even if the Court were not to resolve claims allowance separately, the confirmation process would be better served if the Court were prepared to set forth those views in advance
of the confirmation hearing. Alternatively, if the Court ultimately adopts the approach set forth in C.P. Hall, it would be free at that time to enter partial summary in the claims allowance dispute in a way that gives effect to those conclusions. And all of parties agreed that, however the Court might ultimately resolve the question, the issuance of preliminary observations would permit continued discussions among the parties and allow them to form considered judgments about how to proceed with respect to confirmation with greater visibility into the target at which they will be shooting.
The Court‘s only hesitation is that even in circumstances in which the issuance of an advisory opinion might be helpful to the parties, federal courts lack the authority to provide them. Rather, under Article III of the Constitution, the judicial power is limited to resolving actual
The Court is satisfied, however, that it may repurpose what was previously a draft opinion resolving the summary judgment motions as “preliminary observations” without running afoul of this principle. The Court has before it the pending motions for summary judgment as well as the plan filed by the debtors and the Committee. These are undoubtedly concrete disputes. The process of resolving such disputes is at times iterative. Courts will ask questions of counsel at argument in ways that
reflect the judge‘s thinking. To facilitate that process, this Court has at times (as have many others) offered its “preliminary observations” on an issue, in writing before the argument. The point of doing so is to permit counsel the opportunity to be prepared to respond to and address the Court‘s concerns at argument. To be sure, the preliminary views set forth in this Memorandum Opinion have baked for longer than those the Court typically sets out as “preliminary observations” in advance of an argument. But the principle is the same. If the Court ultimately concludes that it is required to resolve the pending motions for summary judgment, the views set forth herein represent the Court‘s reactions to the briefing and argument, and the Court would expect they would be incorporated into any judgment it would ultimately issue with respect to the allowance of the underlying proofs of claim. And if the Court concludes that it need not resolve those claims allowance disputes prior to confirmation, these observations are intended to guide the parties so that they may effectively address the Court‘s concerns with respect to the reasonableness of the settlements reflected in the plan. In that event, the Court would expect to incorporate these views into any decision it may ultimately issue with respect to whether the plan can be confirmed. This Court is satisfied that it may proceed to resolve the disputes before it in such an iterative manner without running afoul of Article III.
The opinion below accordingly reflects this Court‘s preliminary observations on the pending motions for summary judgment in the claims allowance dispute now pending before the Court. As discussed at the April 7 status conference, after the parties have had the opportunity to consider these views, the Court is prepared to
hold a further status conference for the purpose of addressing how to proceed in these cases in light of these points.
Introduction
This Court has now issued several opinions involving the claims held by various multiemployer pension plans for withdrawal liability arising out of Yellow Corporation‘s withdrawal from those plans. Outside of bankruptcy, ERISA provides that an employer that withdraws from a multiemployer pension plan may pay its withdrawal liability over time. To oversimplify, the annual payment is set at a level that approximates the employer‘s typical annual payments to the plan. And ERISA caps the total withdrawal liability exposure at 20 years’ worth of payments.
So what happens when the employer files for bankruptcy? This Court‘s prior opinions, while not resolving the issue, have engaged questions such as whether the obligation might have been properly accelerated before the petition date,
With the benefit of extensive briefing by the parties on these and other issues, the Court now concludes that several of these questions can be readily resolved through the straightforward application of first principles of bankruptcy law.9
Notes
Bankruptcy itself operates to accelerate obligations that would otherwise come due in the future. That is the rule of Sexton v. Dreyfus and remains a foundational bankruptcy principle.10 And so while the Court will also address (in Part I) the logically antecedent question of whether the obligations had been accelerated before the bankruptcy filing, that issue turns out to be of no consequence, as (for the reasons described in Part II) bankruptcy itself operates as an acceleration.
Even so, one must still address the question of what value to place today on an obligation that would not otherwise be due until years in the future. The parties offer competing approaches to this question of “present discounting,” which is the reason the question whether the liability had been accelerated before the petition date might have made a difference. In the Court‘s view, the Bankruptcy Code directly answers the question of how one present discounts a claim for liability that would, absent the acceleration caused by the bankruptcy itself, otherwise mature in the future.
separating principal from interest may be simple enough when a schedule of future payments contains an express interest rate, such as in an ordinary commercial loan. But other times (such as here) the interest rate may be implicit in a schedule of future payments and therefore less obvious. Whether the interest is express or implied, however, the exercise required by the Bankruptcy Code is the same. One must identify the portion of the obligation that is unmatured interest and disallow that portion of the claim. That conclusion (set out in Part IV) also overtakes the perhaps antecedent question (addressed in Part III) whether a separate provision of ERISA would provide for present discounting. But Part III explains that the Court reads
Finally, the parties have also presented three additional questions: two arising under ERISA and one under state law. The Court concludes in Part V that the cap on withdrawal liability imposed by
Procedural background
Early in this bankruptcy case, various multiemployer pension plans sought relief from the automatic stay to have their disputes over Yellow‘s withdrawal liability resolved in arbitration. This Court denied those motions.11 Instead, the Court concluded that the disputes were properly resolved in this Court, through the claims allowance process. And over the past year, the Court has issued several rulings that bear on the calculation of that withdrawal liability. This Memorandum Opinion is the latest installment in that series. The parties have filed motions for summary judgment that present seven issues involving questions under ERISA, bankruptcy law, and Illinois contract law.
A brief reprise of the history of this litigation, in addition to providing context for the disputes now before the Court, is probably necessary to make the discussion of the rather technical questions presented in these motions comprehensible to the typical reader. After the Court concluded that these issues should be resolved through the claims allowance process, the first substantive dispute presented by the parties was primarily focused on the validity of certain PBGC regulations regarding the calculation of withdrawal liability for those pension plans that received federal funds under the American Rescue Plan Act.
In 2021, Congress poured tens of billions of dollars into faltering multiemployer pension plans to provide security for retirees who count on their pensions to provide for their retirements. The PBGC regulations sought to ensure
that those federal funds would operate to benefit the pension plans rather than to relieve employers who withdraw from such plans of the withdrawal liability they would otherwise owe. The debtors and other parties in the bankruptcy case challenged those regulations on the ground that they conflicted with the relevant statute. In a Memorandum Opinion issued in September 2024, this Court rejected those challenges.12
The final few pages of that Memorandum Opinion addressed a handful of other issues presented by the parties that bear on the calculation of withdrawal liability claims. There, the Court held that: (a) ERISA‘s 20-year cap on withdrawal liability claims applied to the claims asserted by the pension plans; (b) the debtors’ liability had been accelerated on account of their “default“; and (c) the debtors could be held to certain contractual agreements they had reached in which certain pension plans were permitted to use higher “contribution rates” than would otherwise apply under ERISA.13
As to the second of those issues, the term “default” is in scare quotes because it turns out that the Court erred in finding that the debtors had defaulted. The September 2024 Memorandum Opinion correctly explained that only a default under the 20-year obligation to pay withdrawal liability, not a default under the employer‘s regular obligation to fund the pension plans, would accelerate the remaining
withdrawal liability obligations.14 But the Court failed to appreciate that the “default” the plans were referencing as the basis for their claim of acceleration was the debtors’ failure to make timely payment of its regular obligation to pay pension benefits in July 2023.15
On the debtors’ motion for reconsideration, the Court acknowledged its error and amended its September 2024 Memorandum Opinion.16 The order granting reconsideration (issued in November 2024) pointed out that on the summary judgment record then before the Court, there was no basis to determine whether the debtors had defaulted, as of the petition date, on their 20-year obligation to pay withdrawal liability. The Court noted that this gave rise to a series of questions that would need to be addressed to resolve the claims allowance dispute.17 In substance, those questions boil down to the following:
- Whether, prepetitition, any of the plans declared a default and accelerated the debtors’ withdrawal liability?
- If the plans did not declare a default prepetition,
- Whether the plans had the authority to declare an insecurity default under
29 U.S.C. § 1399(c)(5)(B) as a result of the debtors’ bankruptcy filing; and - If so, whether a provision that would permit them to do so would be a prohibited ipso facto clause under the Bankruptcy Code.
- Whether, if applicable, an accelerated stream of payments should be discounted to present value? And, relatedly, whether withdrawal liability contemplates some implied interest (as opposed to being interest free)?
- And, finally, if the stream of payments should be discounted to present value, what is the appropriate discount rate?18
Certain creditors and equity holders also moved for reconsideration of the Court‘s decision upholding the validity of the PBGC regulations. The Court denied that motion.19
On December 12, 2024, the Court entered an agreed order that established a briefing schedule and set a January 28, 2025 argument date for summary judgment motions addressed to the issues described above, as well as any other issues related
to withdrawal liability claims that were amenable to resolution on summary judgment.20
The parties’ summary judgment motions presented the following seven issues for resolution:
- Whether, as of the petition date, the debtors’ obligation to pay withdrawal liability over 20 years had been accelerated as a result of a default.
- Whether the debtors’ 20-year stream of payments is accelerated because of their bankruptcy filing.
- Whether that stream of future obligations should be discounted to present value on account of
29 U.S.C. § 1405(e) . - Whether, under federal bankruptcy law, the 20-year stream of payments should be present discounted, and if so, what discount rate should be used for that purpose.
- Whether the limitation on withdrawal liability set forth in
29 U.S.C. § 1405(b) applies to the employer‘s total share of the plan‘s unfunded vested benefits, or only the amount after the application of the 20-year cap provided in29 U.S.C. § 1399(c)(1)(B) . - Whether Central States and Local 641 used appropriate contribution base units when calculating the debtors’ annual payment.
- Whether Central States’ claim arising under a side letter between the parties is properly enforceable under applicable non-bankruptcy law.
The Court has undertaken, below, to answer each of the legal questions raised by the parties.
Jurisdiction
The pending motions for summary judgment arise in the context of claims allowance disputes. These issues arise under
Analysis
I. The debtors had not defaulted on their withdrawal liability obligations as of the petition date.
Earlier in this case, the Court proceeded on the assumption (with which the parties appeared to agree) that it mattered whether the debtors had defaulted prepetition on their withdrawal liability obligations. The reasoning was that if the debtors had not defaulted, then as of the petition date they would owe a 20-year stream of payments, in which case the claims would be subject to present discounting.
By contrast, if the debtors had defaulted prepetition, then as of the petition date they would owe an already-accelerated lump sum amount, in which case there would be no reason to present discount it.
And even if the debtors had not defaulted as of the petition date, many of the plans contended that the debtors’ bankruptcy filing operated as an “insecurity default” that accelerated the withdrawal liabilities. If that were true, it would then give rise to the question whether such an ipso facto provision in a prepetition agreement is enforceable in the context of claims allowance. As opposed to the various specific contexts in which the Bankruptcy Code expressly provides that ipso facto clauses are unenforceable, the Code contains no express provision prohibiting the enforcement of ipso facto clauses in the context of claims allowance.21
As further described in Part II, the Court has concluded that the assumption underlying that presentation of the question was incorrect. A bankruptcy filing necessarily operates to accelerate a future stream of payments to the petition date. That still leaves the question of whether and how one present discounts that stream of future liabilities, an issue addressed in Part III (under ERISA) and Part IV (under the Bankruptcy Code). But the conclusion that bankruptcy operates as an acceleration largely overtakes the question whether the debtors’ withdrawal liability had or had not been accelerated under non-bankruptcy law as of the petition date as well as the question whether the plans were entitled to declare a default and accelerate the liability as a result of the bankruptcy filing.
But simply for the sake of completeness, the debtors’ withdrawal liability had not (other than by operation of the bankruptcy filing itself) been accelerated as of the petition date. The debtors’ motion for summary judgment explains that some but not all of the pension plans had the right, under the plan terms, to declare an “insecurity default” on the 20-year stream of payments on account of the debtors’ bankruptcy filing.22 Even if such an ipso facto provision would be enforceable, none of the pension plans point to anything in the summary judgment record to suggest that any of the plans’ documents provide for an automatic acceleration upon a bankruptcy filing.23 At most, certain of the plans point to provisions under which the plan would be entitled to declare an “insecurity default” upon the initiation of bankruptcy proceedings.24 But there is nothing in the summary judgment record to suggest that any plan in fact had done so before the bankruptcy filing. Indeed, the record suggests that the plans generally did not even determine the debtors’ withdrawal liability until they filed their proofs of claim, well after the petition date. The Court accordingly concludes that the debtors’ withdrawal liability had not been accelerated, under any principle of non-bankruptcy law, prior to the petition date. And because (as discussed
in Part II) the bankruptcy itself operates as an acceleration, it makes no difference whether any of the plans had validly acted to cause an acceleration on a postpetition basis.
II. The debtors’ 20-year stream of withdrawal liability payments were accelerated by virtue of the bankruptcy filing.
The debtors’ bankruptcy filing did, however, operate to accelerate their withdrawal liability obligations, which would otherwise have been payable over 20 years.
Bankruptcy law generally presumes that the petition date “fixes the moment when the affairs of the bankrupt are supposed to be wound up.” Sexton v. Dreyfus, 219 U.S. 339 (1911) (Holmes, J.); see also Douglas G. Baird, The Elements of Bankruptcy 84 (7th ed. 2022) (explaining that a key concept underlying the Bankruptcy Code is that, as of the petition date, each creditor‘s non-bankruptcy right to the debtor‘s estate is “transformed” into a bankruptcy claim).… “[T]he petition date is, in essence, a ‘day of reckoning,’ consolidating the debtors’ present and future obligations into one moment for prompt resolution.”26
Indeed, the Third Circuit had made largely the same point in In re Oakwood Homes Corp., where it noted that the “general rule of both the Bankruptcy Code and
None of the foregoing ought to be terribly surprising and it is largely common ground among the parties.29 The debtors’ prepetition withdrawal from their multiemployer pension plans gave rise to withdrawal liability under ERISA. As described above, outside of bankruptcy that liability would be payable over a period that could be as long as 20 years. In bankruptcy, each of the plans is entitled to an allowed claim in a lump sum amount. Accordingly, the principal task is how to translate a series of payments that would otherwise run forward over 20 years into a single lump sum allowed claim as of the petition date. Part III addresses whether
III. While it appears that 29 U.S.C. § 1405(e) would operate to present value future liabilities under ERISA, the issue, even if preserved, is overtaken by the work done by the Bankruptcy Code.
As further described below, as a substantive matter
A. The calculation of the (up to) 20-year payment of withdrawal liability includes the payment of interest.
To make sense of the arguments advanced by the parties with respect to
As it turns out, that same rate of return (which the Supreme Court, in the passage below, refers to as an interest rate) is also built into the (up to) 20-year period for paying withdrawal liability. The Supreme Court‘s decision in Joseph Schlitz explains the process of calculating withdrawal liability when it is to be paid out in installments that run for up to 20 years:
The statutory method is unusual in that the statute does not ask the question that a mortgage borrower would normally ask, namely, what is the amount of each of my monthly payments? What size monthly payment will amortize, say, a 7% 30-year loan of $100,000? Rather, the statute fixes the amount of each payment and asks how many such payments there will have to be. To put the matter more precisely, (1) the statute fixes the amount of each annual payment at a level that (roughly speaking) equals the withdrawing employer‘s typical contribution in earlier years; (2) it sets an interest rate, equal to the rate the plan normally uses for its calculations; and (3) it then asks how many such annual payments it will take to “amortize” the withdrawal charge at that interest rate.34
As discussed elsewhere,
In addition, the Supreme Court opinion in the Joseph Schlitz case makes another point about the calculation of withdrawal liability that is important to an issue addressed in Part IV.C of this Memorandum Opinion, but is logically mentioned here in connection with how, under ERISA, withdrawal liability obligations include an interest component.
After the passage block quoted above, the Court suggested that the question posed by ERISA is “[h]ow many annual payments of [the annual payment amount] does it take to pay off a debt of [the employer‘s share of the plan‘s unfunded vested benefits] if the interest rate is [the rate used to calculate minimum funding]?”39 It then observed that the “practical effect” of calculating withdrawal liability in this manner “is that any amortization interest [the statute] may cause to accrue is added at the end of the payment schedule (unless forgiven by [the application of the 20-year cap]).”40 Later in the opinion, the Court echoed this observation about ERISA providing for interest payments to be tacked on at the end, commenting that to the extent that ERISA‘s 20-year cap becomes applicable, “the presence or absence of withdrawal-year interest ... will make no difference” because “the last payments will never be made.”41 For the reasons that will be described in Part IV.C, the Court concludes that these statements about interest being tacked on at the end of the payment period are not applicable here in light of the directions, set forth both in
B. 29 U.S.C. § 1405(e) seems to remove interest from the calculation of withdrawal liability when there are multiple withdrawals occasioned by a liquidation, but because the same result is required by § 502(b)(2) of the Bankruptcy Code, the Court need not resolve that question here.
Various provisions of
After the previous subsections of
(1) all such withdrawals shall be treated as a single withdrawal for the purpose of applying this section, and
(2) the withdrawal liability of the employer to each plan shall be an amount which bears the same ratio to the present value of the withdrawal liability payments to all plans (after the application of the preceding provisions of this section) as the withdrawal liability of the employer to such plan (determined without regard to this section) bears to the withdrawal liability of the employer to all such plans (determined without regard to this section).43
The second part of this subsection is certainly a mouthful. In substance, it creates an equation that can be used to calculate the withdrawal liability owed to a particular plan (which will be denoted as X), in which the ratio between the liability to that plan and the present value of the liability to all plans (Y) is the same as the ratio between the liability to that plan (X‘) and the liability to all plans (Y‘), in both cases “determined without regard to [
Expressed in mathematical terms, the formula is:
x / y = x’ / y’
So imagine that you knew the present value of the total withdrawal liability (Y), the total withdrawal liability without applying
x = y * (x’ / y‘)
A treatise on ERISA explains the point the same way. An employer‘s liability to a particular pension plan is calculated by multiplying the present value of the employer‘s withdrawal liability to all of the pension plans by a particular plan‘s share of the employer‘s total withdrawal liability as determined without applying the limits in
On the off chance that the foregoing explanation is not crystal clear to the reader, a concrete example may help explicate the point. Consider an employer that had liability to two different multiemployer pension plans (Plan A and Plan B). Assume that the employer‘s share of Plan A‘s unfunded vested benefits is $10 million and its share of Plan B‘s unfunded vested benefits is $5 million.
Assume further that the annual payment owed to Plan A calculated under
Following the equation set forth above, the first step in solving for X is figuring out how to calculate Y, which is the present value of the liability to all plans. Because the present value of the payments disregards the effect of the interest owed, the present value of the employer‘s total withdrawal liability is $15 million - the $10 million owed to Plan A plus the $5 million owed to Plan B.
What is the work done by
Presented in chart form (which may be easier to follow), the analysis is as follows:
| Plan A | Plan B | Total | |
|---|---|---|---|
| Annual payment | $ 1,000,000 | $ 500,000 | $ 1,500,000 |
| 10 annual payments (present value) | $ 10,000,000 | $ 5,000,000 | $ 15,000,000 |
| Percent of total based on present value (without section 1405 reductions) | 67% | 33% | 100% |
| Reduction under sections 1405(a) - (d) | $ (2,000,000) | $ (3,000,000) | $ (5,000,000) |
| Total withdrawal liability after reductions | $ 8,000,000 | $ 2,000,000 | $ 10,000,000 |
| Total withdrawal liability after 1405(e) (assuming the ratio by which one multiplies the present value of total liabilities includes interest) | $ 6,666,667 | $ 3,333,333 | $ 10,000,000 |
In substance,
Importantly, on the analysis above,
During the argument on the motions, certain of the parties (as well as the Court, based on its own review of the statutory language) suggested that the provision might do a third thing. The suggestion was that the statute might operate to spread the effect of differing interest rate assumptions used by the actuaries across the various plans in a way that is similar to the way in which the
Perhaps that is correct. The analysis above was premised on the assumption that the language at the end of the statute - the part referred to above as (x’ / y‘) - is referring to those liabilities in present value terms. But the language of the statute does not say that expressly. It only refers to the ratio between the withdrawal liability an employer owes to a particular plan and the employer‘s total amount of withdrawal liability, without indicating whether the amounts were in present value terms or based on the total amount of the payments (nominal terms).45
If the assumption reflected in the analysis above is correct and the relevant ratio is to be calculated in present value terms, then a plan that used a higher interest rate assumption does no better than one that used a lower interest rate assumption. Because the plans’ relative shares are calculated without respect to interest, the actuarial assumption does not affect any plan‘s relative share. On the other hand, if the interest that would be paid is included in the last portion of the statute, then plans with higher interest rate assumptions would recover a larger share of the total withdrawal liability payment. But importantly, the employer‘s aggregate withdrawal liability would not be affected.
This point can be seen in the chart below. It is premised on the chart above but builds in different interest rate assumptions between Plan A and Plan B and calculates each plan‘s share of the total withdrawal liability on the assumption that the ratio includes interest.
| Plan A | Plan B | Total | |
|---|---|---|---|
| Annual payment | $ 1,000,000 | $ 500,000 | $ 1,500,000 |
| 10 annual payments (present value) | $ 10,000,000 | $ 5,000,000 | $ 15,000,000 |
| Percent of total based on present value (without section 1405 reductions) | 67% | 33% | 100% |
| Reduction under sections 1405(a) - (d) | $ (2,000,000) | $ (3,000,000) | $ (5,000,000) |
| Total withdrawal liability after reductions | $ 8,000,000 | $ 2,000,000 | $ 10,000,000 |
| Actuarial assumption re: interest rate | 2.90% | 7.75% | |
| Number of annual payments including interest (without reductions under sections 1405(a) - (d)) | 12.0 | 20.0 | |
| Withdrawal liability including interest | $12,000,000 | $10,000,000 | $ 22,000,000 |
| Percent of total assuming interest is included | 55% | 45% | 100% |
| Total withdrawal liability after 1405(e) | $ 5,454,545.45 | $ 4,545,454.55 | $ 10,000,000.00 |
As seen above, under this latter reading of the statute, a plan that used a higher interest rate assumption would end up holding a larger claim than it otherwise would have; one that used a lower interest rate assumption would hold a smaller claim. Specifically, Plan A, which used a 2.9 percent interest rate (and thus would receive 12 annual payments instead of 10) would have its claim reduced from $6.67 million (under the prior assumption) to $5.45 million. Plan B, which used a 7.75 percent interest rate (and thus would receive 20 annual payments instead of 10) would have its claim increased from $3.33 million (under the prior assumptions) to $4.55 million. Although the employer‘s total withdrawal liability is still the present value of that total liability after taking the deductions required in
Ultimately, the Court concludes that it need not resolve these questions under
IV. Even if 29 U.S.C. § 1405(e) did not do so, under § 502(b)(2) of the Bankruptcy Code, any claim for the unmatured interest in the calculation of withdrawal liability must be disallowed.
As set forth above, the Court is not relying on
The debtors argue in their objections that the 20-year stream of obligations should be discounted to present value.47 The debtors’ expert, whose report was provided in discovery and has been filed as an exhibit to the debtors’ summary judgment motion, argues that the rate at which the pension plans’ claims should be discounted should be based on Yellow‘s cost of debt capital, which he estimates as being between 13 percent and 18 percent.48 In effect, the debtors’ ask that the Court determine now that the withdrawal liability claims should be discounted at the debtors’ cost of capital, with the precise rate to be decided at trial.49 The pension plans take a variety of different approaches to the issue, with many contending that claim should not be discounted at all.50
For the reasons described below, the Court concludes that
While the paradigmatic example of unmatured future interest likely arises when the debtor receives a loan and the parties have expressly negotiated the rate of interest, that is not the only example. At times, an interest rate (and thus the unmatured interest) may be implicit in the terms reached between the parties. When that is the case, a bankruptcy court should, following the established principle of federal bankruptcy law to focus on the economic substance of the parties’ relationship rather than its form, separate the remaining amounts due into principal and unmatured interest and disallow that portion of the remaining liability that is properly characterized as unmatured interest. In this case, that is a straightforward task. While the interest that is implicit in the withdrawal liability claim (as described in Part III.A) is fundamentally a function of ERISA, and not the result of bargaining between the parties, it is nevertheless interest. That amount should be disallowed under
A. Under Oakwood Homes, disallowance of unmatured interest is the Bankruptcy Code‘s method of present valuing future claims; when future payments include unmatured interest, no further present discounting is appropriate.
No one contests that, because of the time value of money, a stream of payments stretching out over twenty years is worth less than having the total sum of those amounts paid today. As the Supreme Court put the point in Till, a “promise of future payments is worth less than an immediate payment in the same total amount because [the promisee] cannot use the money right away, inflation may cause the value of the dollar to decline before the [promisor] pays, and there is always some risk of nonpayment.”51 Or as the Third Circuit said in Oakwood Homes, “money received today is more valuable than money negotiated to be received in the future.”52
One of the ways that bankruptcy law accounts for the time value of money is that, under
Consider, for example, a claim by a lender who advanced $10 million to the debtor on a 20-year loan, with annual payments at an interest rate of 8 percent. Using standard amortization principles, the payment schedule on such a loan would be as follows:
| Year | Payment | Principal | Interest |
|---|---|---|---|
| 1 | $1,018,522.09 | $218,522.09 | $800,000.00 |
| 2 | $1,018,522.09 | $236,003.86 | $782,518.23 |
| 3 | $1,018,522.09 | $254,884.16 | $763,637.92 |
| 4 | $1,018,522.09 | $275,274.90 | $743,247.19 |
| 5 | $1,018,522.09 | $297,296.89 | $721,225.20 |
| 6 | $1,018,522.09 | $321,080.64 | $697,441.45 |
| 7 | $1,018,522.09 | $346,767.09 | $671,755.00 |
| 8 | $1,018,522.09 | $374,508.46 | $644,013.63 |
| 9 | $1,018,522.09 | $404,469.13 | $614,052.95 |
| 10 | $1,018,522.09 | $436,826.67 | $581,695.42 |
| 11 | $1,018,522.09 | $471,772.80 | $546,749.29 |
| 12 | $1,018,522.09 | $509,514.62 | $509,007.47 |
| 13 | $1,018,522.09 | $550,275.79 | $468,246.30 |
| 14 | $1,018,522.09 | $594,297.86 | $424,224.23 |
| 15 | $1,018,522.09 | $641,841.68 | $376,680.40 |
| 16 | $1,018,522.09 | $693,189.02 | $325,333.07 |
| 17 | $1,018,522.09 | $748,644.14 | $269,877.95 |
| 18 | $1,018,522.09 | $808,535.67 | $209,986.42 |
| 19 | $1,018,522.09 | $873,218.53 | $145,303.56 |
| 20 | $1,018,522.09 | $943,076.01 | $75,446.08 |
| TOTAL | $20,370,441.76 | $10,000,000.00 | $10,370,441.76 |
If the borrower were to perform fully on the loan, over its 20-year life, the borrower would pay the lender a total of approximately $20.37 million, of which $10 million would be the return of the principal and $10.37 million would be interest payments. But if the borrower were to file for bankruptcy immediately after the loan were funded, the lender would not have a claim in bankruptcy for $20.37 million (which is, in effect, what most of the pension plans are suggesting should be their allowed claims). Rather, under
Viewed this way, it seems plain enough that the work done by
This is the commonsense insight that undergirds the Third Circuit‘s decision in Oakwood Homes. In that case, the bankruptcy court first disallowed a creditor‘s claim for unmatured interest, and then further discounted the stream of future payments to present value. The Third Circuit found this to be improper. Relying on the legislative history of
That point explains why the Court rejects the claim that counsel for MFN Partners, one of the debtors’ equity holders, made at oral argument on the current motion. In testing the proposition whether present discounting is appropriate beyond the disallowance of unmatured interest, the Court asked counsel whether a lender that made an interest-free loan (such that there is no unmatured interest to be disallowed under
Counsel argued that if a debtor were the borrower on an interest-free loan, the claim should be present discounted to an amount less than the unpaid principal.57 The obvious difficulty with that argument, however, is that it has no logical stopping point. If that is the correct result with an interest-free loan, then the same rationale should presumably apply any time a creditor filed a claim on account of a prepetition loan whose interest rate was lower than the rate that a court would otherwise find to be the proper discount rate. Counsel deserves credit for sticking to his guns and following the logic of his position through to its logical conclusion, effectively acknowledging that determining the allowed claim on any loan would require a comparison between the stated interest rate and prevailing market rates.58
The basic error in this position is that it would create a system in which creditors are treated equally on account of their economic position outside of bankruptcy. But that is not what bankruptcy law does. Rather, it treats creditors equally on account of their allowed claims. A lender who makes a $1 million loan to a debtor bearing 8 percent interest, and maturing in five years, has greater rights, outside of bankruptcy, than one who makes an otherwise equal loan on the same day at 4 percent interest. The first is owed $1.25 million over five years, while the second is owed only $1.12 million. But if the debtor files for bankruptcy the day after closing on those two loans, both creditors have their claims for unmatured interest disallowed, leaving each as the holder of an allowed claim for $1 million. So while the Court appreciates the position articulated by MFN‘s counsel that present discounting the plans’ withdrawal liability claims using an appropriate discount rate would “put the claims on an equal playing field with other creditors,” that vision of
“equal treatment” reflects a different vision of equality than the one codified in the Bankruptcy Code. The way the Code deals with the problem of present valuing interest-bearing claims that will mature in the future is by disallowing that portion that is attributable to unmatured interest.
B. Nothing in § 502(b)(2) is limited to contractual interest as agreed between the parties; the interest that is included by virtue of actuarial assumptions under ERISA should be disallowed under § 502(b) .
The debtors’ principal response to this argument is that the rationale of Oakwood Homes applies only to interest rates that are set forth in a “bargained for debt instrument.”59 Their position appears to be that when the interest rate is either statutorily imposed or simply implicit the in the parties’ economic arrangement,
It is well established that bankruptcy courts have the authority, when viewing an economic arrangement, to look through the labels that may be affixed to it in order to treat that relationship appropriately in light of its economic reality. That principle traces its roots to the Supreme Court decision in Pepper v. Litton, where the Court made clear that bankruptcy law preserved the traditional equitable power to ensure that “substance will not give way to form.”60 There, the Court had no trouble with the proposition that amounts due to the debtor‘s principal, ostensibly for unpaid wages due to him, were properly treated as capital contributions, and thus as equity interests rather than in “pari passu treatment with the claims of other creditors.”61 Bankruptcy courts regularly invoke this authority to, among other things, recharacterize arrangements that the parties may describe as loans as equity contributions or agreements characterized as leases as secured loans.62
This same principle can be invoked to determine whether unmatured interest (that should be disallowed under
Or consider a furniture store that offers a buyer of a living room set the choice between paying $5,000 in cash or an installment plan under which the buyer is obligated to make monthly payments of $101 for 5 years (an amount that would yield total payments of $6,060). What happens if the buyer were to choose the installment plan and then file for bankruptcy the day after the purchase? The answer is that, under the principle of Pepper v. Litton, the substance of the transaction must prevail over its form. And the substance of this installment plan is that it is the economic equivalent of a loan bearing interest at 8 percent. So in the buyer‘s bankruptcy case filed immediately after the sale, the store would hold an allowed claim for $5,000. If the store were to file a claim for the full $6,060 it would have been paid outside of bankruptcy, $1,060 of that claim would be disallowed as unmatured interest under
This commonsense point — that at times a party‘s obligation to make one or more payments over a period of time contains an implicit interest component, even if the articulation of the payment(s) as one part principal and another interest is not express — should provide the starting point to answering the question that the Third Circuit left open in Oakwood Homes. The Third Circuit there explained that the language of
The court did not need to reach when such a reduction would be appropriate, as that question was obviated by its conclusion that where there is an express interest component to a stream of future payments, unmatured interest should be disallowed under
Other courts, however, have engaged the question that Oakwood Homes left open. In In re B456 Systems, for example, Judge Carey concluded that, under Oakwood Homes, a rejection damages claim was subject to being discounted to present value, at a discount rate to be set by the court, because the claim at issue there “is not based upon an interest-bearing instrument and did not include any bargained-for right to interest.”67 This Court, however, does not read either Oakwood Homes or B456 Systems to suggest that
Accordingly, the relevant question here is whether the up to 20-year schedule of payments that is calculated pursuant to ERISA includes an interest component that should be disallowed from the claim in bankruptcy under
It bears note that one of the pension plans, Local 705, asserts that it calculated its claim in precisely this fashion. As Local 705 states in its briefing, the total stream of payments that would be owed to it on its withdrawal liability claim would come to $25,596,814.69 But that amount includes interest running at 6.75 percent per year. With that interest removed, Local 705‘s claim is reduced to $17,830,282, which is the amount of the claim it presently asserts.70 The Court concludes that this is the correct mode of analysis.
C. Even for those plans whose claims are subject to the 20-year cap, withdrawal liability is calculated by dividing the total claim into principal and interest using normal principles of amortization (at the applicable interest rate) and disallowing the claim for unmatured interest under § 502(b)(2) .
The only possible complication involves those plans for which the debtors’ share of the unfunded vested benefits exceeds the cap imposed by
This Court, however, does not believe that the question of claims allowance under
This manner of harmonizing the commands of federal bankruptcy law with the requirements of ERISA makes sense for two reasons that are rooted in ERISA itself. The first is that this notion that the interest payment is tacked on at the end is neither specified in ERISA itself nor were the statements in Joseph Schlitz necessary to the Court‘s decision. The relevant statutory language is set forth in
Recall that the issue before the Supreme Court in Joseph Schlitz was whether interest on the withdrawal liability obligation began running at the beginning of the year after the withdrawal or the beginning of the year before the withdrawal. The Court concluded that interest begins to accrue at the beginning of the year after the withdrawal, and not during the year of the withdrawal itself.73
The point the Court was making in the passage where it states that the interest “shows up at the end of the payment schedule” was that the manner in which ERISA calculates withdrawal liability does not lead to a calculation of “an actuarially perfect fair share” of the unfunded vested benefits.74 To illustrate that point, the Court explained that when the 20-year cap applies, some portion of the employer‘s share of the unfunded vested benefits will go unpaid. Specifically, the opinion states that:
For another thing, [ERISA] forgives all annual installment payments after 20 years, see
§ 1399(c)(1)(B) — and that means that, if an employer‘s normal annual contribution was low compared to the withdrawal charge, the presence or absence of withdrawal-year interest (which shows up at the end of the payment schedule...) will make no difference (for the last payments will never be made).75
In other words, if the application of the annual cap (without interest) would consume 18 annual payments, and adding interest would require four additional payments, then the employer‘s withdrawal liability will be actuarially imperfect, because the employer will only be required make 20 payments — not 22. But because dollars are fungible and because addition is subject to the transitive property, the basic point the Court is making is true whether the interest payments are made first, last, or are subject to ordinary principles of amortization. The Supreme Court has often admonished that language in judicial opinions should not be “parsed as though we were dealing with language of a statute.”76 In light of that principle, this Court does not believe it appropriate to treat the Court‘s casual reference to interest being tacked onto the end of the withdrawal liability payment as controlling in this very different context.
The second reason in support of that conclusion comes from
In the context of claims allowance under
V. The § 1405(b) adjustment is applied after § 1381 ‘s 20-year cap.
Section 1405(b) of title 29 caps the unfunded vested benefits allocable to an employer “in the case of an insolvent employer undergoing liquidation or dissolution.”77 The amount of the cap is as follows:
an amount equal to the sum of—
- 50 percent of the unfunded vested benefits allocable to the employer (determined without regard to this section), and
- that portion of 50 percent of the unfunded vested benefits allocable to the employer (as determined under paragraph (1)) which does not exceed the liquidation or dissolution value of the employer determined—
- as of the commencement of liquidation or dissolution, and
- after reducing the liquidation or dissolution value of the employer by the amount determined under paragraph (1).78
In effect,
The parties dispute when the
A. The debtors’ § 1405(b) argument is properly preserved.
Certain pension plans argue that the debtors have waived their
“[T]he waiver rule is one of discretion rather than jurisdiction.”81 When confronted with an argument that was preserved imperfectly (or even inadequately), courts may nevertheless address it on the merits if they conclude that the “public interest is better served by addressing [it] than by ignoring it” and as long as the court is satisfied that doing so “does not cause surprise or prejudice” to other parties in interest.82
It is true that the debtors initially raised the
Most importantly, the Court is satisfied that addressing this issue on the merits will not unfairly prejudice the objecting plans. All parties have now had a reasonable opportunity to present their arguments on the issue. So in the absence of any identifiable prejudice, this Court is inclined to exercise its discretion in favor of getting to the result actually required under the law, rather than applying the strictest possible construction of the rules of waiver.
B. This Court may grant partial summary judgment on a part of the debtors’ § 1405(b) claim under Rule 56 .
Various plans also argue that because there has been no determination that the debtors were insolvent on the petition date, and
The 2010 Amendments to
That scenario is no different than having this Court address the dispute about how
The Court is therefore satisfied that the debtors’ motion is procedurally proper. As amended in 2010,
C. 29 U.S.C. § 1405(b) applies in the context of a chapter 11 liquidation.
Only one party — the Philadelphia Plan — contests the threshold applicability of
To be sure, the plan correctly points out that
The Court thus concludes that the debtors are undergoing a liquidation for the purposes of
D. 29 U.S.C. § 1405(b) applies in addition to, not instead of, the 20-year cap.
As discussed at length in this Court‘s earlier decisions on this topic, an employer‘s withdrawal liability is equal to its allocable share of the plan‘s unfunded vested benefits as reduced by various mandatory adjustments.94 A plan‘s unfunded vested benefits are the value of the plan‘s “nonforfeitable benefits” (i.e., what the plan will owe to participants in the future) minus the value of the plan‘s assets at that point in time.95
To determine the withdrawing employer‘s allocable share of the plan‘s unfunded vested benefits, the plan‘s actuary will divide the total amount of plan contributions by the withdrawing employer‘s contributions.96 That amount is then analyzed under
Section 1381(b)(1) lists four reductions, which proceed in a series of steps. “[F]irst,” the plan should apply any applicable de minimis reductions.98 “[N]ext,” the plan must make certain reductions if there was a partial withdrawal.99 “[T]hen,” the plan must apply the 20-year cap (if applicable).100 And “finally,” the plan must apply any applicable reductions under
The 20-year cap — the third of the four steps in the process — applies if, in view of the fixed annual payment amount, it would take the withdrawing employer more than 20 years to pay off its withdrawal liability. This Court previously explained that even if the debtors had defaulted on their obligation to pay withdrawal liability before the petition date (they had not), any “accelerated” obligation to pay withdrawal liability would still be subject to the 20-year cap provided for in
The fourth step in the process prescribed by
1. The text of § 1381(b)(1) establishes the order in which the various withdrawal liability adjustments must be applied.
Section 1381(b)(1) of title 29 sets forth the order by which the various adjustments should be applied.106 And the statute makes plain that the
The Ninth Circuit reached the same conclusion in GCIU-Employer Retirement Fund v. Quad/Graphics, Inc.109 In that case, the withdrawing employer challenged the pension plan‘s calculation of its withdrawal liability on the grounds that it had not applied one of the partial withdrawal reductions before applying the 20-year cap.110 The Ninth Circuit held that “[s]ection 1381(b)(1) plainly dictates the order of operations in calculating withdrawal liability.”111
In seeking to distinguish that reasoning, Central States points to a wrinkle in the statutory language of
The architecture of the United States Code is as follows:
- Titles
- Chapters
- Subchapters
- Subtitles
- Parts
- Sections
Section 1405(a)(1) is located in part I of subtitle E of subchapter III of chapter 18 of title 29. Part I is comprised of
In substance, Central States’ argument is that one should draw a negative inference from the parenthetical in
To be sure, Central States is correct that as a general matter one ought to read a statute so that every provision has independent meaning, and no provision is rendered superfluous. But the “canon against superfluity assists only where a competing interpretation gives effect to every clause and word of a statute.”114 The problem with Central States’ position is that it just cannot be squared with the import of
2. The debtors’ positions are not contrary to the law of the case.
From that statement, certain plans argue that the law of the case thus requires that every reference in
VI. Central States and Local 641 used inappropriate contribution rates when calculating the debtors’ withdrawal liability.
The debtors argue that two pension plans, Central States and Local 641, inappropriately included post-2014 contribution rate increases into their calculation of the debtors’ annual payment.119
ERISA establishes certain thresholds, and accompanying obligations, that correspond to the financial health of a multiemployer defined benefit pension plan.120 Plans are either (1) not graded (i.e., healthy); (2) endangered or seriously endangered; (3) critical; or (4) critical and declining.121 Once a plan enters critical status under
In 2014, Congress amended ERISA to address certain solvency issues facing some of the nation‘s largest multiemployer pension plans.124 An employer‘s level of plan contributions is a significant factor in calculating withdrawal liability. The 2014 amendments made certain changes to that calculation. One of the changes requires that increases in an employer‘s plan contributions that were made to help the plan meet its rehabilitation plan requirements would not increase the employer‘s withdrawal liability.125
Congress effectuated the exclusion of contribution rate increases owing to a plan‘s rehabilitation status in
Central States argues that the contribution rate it used to calculate the debtors’ annual payment was appropriate because none of the “rate increases were required by (or made in compliance with)” Central States’ rehabilitation plan status.130 This argument fails in the face of the plain statutory language.
Central States contends that “every post-2014 rate increase was used to provide an increase in benefits by virtue of Central States Pension Fund‘s long-standing benefit accrual formula, whereby a participant earns a monthly benefit equal to 1% of all contributions made on their behalf.”131 Central States adds that “[u]nder this formula, every contribution rate increase paid by an employer leads to increased benefit accruals for its employees.”132
The difficulty with this argument, however, is that the statute makes plain that if the increase results from an increase in future benefit accruals, then it will not count toward the calculation of withdrawal liability unless the plan complies with
The Court thus concludes that Central States and Local 641 did not properly exclude post-2014 contribution rate increases when calculating the debtors’ withdrawal liability.
VII. The liquidated damages provision contemplated in the 2014 letter agreement is an unenforceable penalty under Illinois law.
In 2014 the parties entered into an agreement relating to Yellow‘s 2011 deferral of its contribution to Central States.134 The 2014 agreement, formally titled “Guarantee of Continued Participation,” provides that Yellow would continue to participate in the Central States plan for 10 years after it fully paid off the amounts it had deferred.135 Yellow completed those payments in January 2023, and withdrew from the Central States plan in July 2023 when it ceased its business operations.136
The letter agreement contains a damages provision that, on the facts presented here, contemplates nearly a billion dollars in damages.137 The parties filed cross motions for summary judgment as to the enforceability of the liquidated damages provision. While the parties’ arguments address several different issues, the Court concludes that this liquidated damages provision is an unenforceable penalty clause. The Court accordingly need not consider the debtors’ various other challenges to the enforcement of the agreement.
There is no dispute that Illinois law is applicable to the construction and enforcement of the letter agreement. And under Illinois law, when the “sole purpose of [a liquidated damages provision] is to secure performance of the contract, the provision is an unenforceable penalty.”138 That principle is consistent with the broader contract law policy that “[p]unishment of a promisor for having broken his promise has no justification on either economic or other grounds and a term providing such a penalty is unenforceable on grounds of public policy.”139
Illinois courts have incorporated the Restatement‘s test to determine whether a damages provision in a contract operates as an impermissible penalty.140 Courts generally ask whether (1) the parties “intended to agree in advance to the settlement of damages;” (2) the amount of damages “was reasonable at the time of contracting” and bears “some relation to the damages which might be sustained;” and (3) actual damages would “be uncertain in amount and difficult to prove.”141 Illinois law also permits courts to take account of other (unspecified) factors, as the caselaw explains that “each [liquidated damages provision] must be evaluated on its own facts and circumstances.”142
A reading of the 2014 letter agreement evidences a singular purpose: to make it more expensive for Yellow to withdraw from the Central States plan. The debtors’ core obligation under the letter agreement is that they “continue to participate in and pay contributions to the Pension Fund pursuant to collective bargaining agreements for a period of not less than ten (10) full years” after they paid off the deferred contribution amounts.143 There are, to be sure, other requirements. But none of them imposes additional substantive compliance obligations on the debtors.144 Read in that context, the only practical purpose of the letter agreement was to require Yellow to pay additional damages in the event of a withdrawal.
One could, perhaps, have a conversation about whether the statutory right to withdrawal liability under ERISA fully compensates Central States for the economic harm associated with Yellow‘s withdrawal. And one could certainly argue that to be in the same economic position in which Central States would have been had Yellow continued its participation in the Central States plan until 2033, Yellow would need to pay more than just its statutory withdrawal liability. But even so, the liquidated damages formula provided by the letter agreement neither takes account of the withdrawal liability claim to which Central States is entitled nor reduces the amount owed on account of the fact that Yellow‘s employees will no longer accrue benefits. As such, one cannot say that the liquidated damages provision bears any rational relationship to the damages that Central States will suffer on account of a breach, or even that it reflects any effort to do so.
The only conclusion, then, is that the liquidated damages provision was primarily intended to secure debtors’ continued participation in the plan. The Court thus concludes that the liquidated damages provision contained in the 2014 letter agreement is an invalid penalty under Illinois law.
Conclusion
For these reasons, to the extent the Court determines that, should it proceed towards resolution of the claims allowance dispute, the debtors’ motion for summary judgment would be granted in part and denied in part, as would be those of the various pension plans. To the extent the Court concludes that it may take up plan confirmation without adjudicating the claims allowance disputes, the debtors and the Committee should be prepared to demonstrate, at confirmation, the reasonableness of the settlements proposed in the plan (under whatever standard is deemed to be applicable) in view of these conclusions.
Dated: April 7, 2025
CRAIG T. GOLDBLATT
UNITED STATES BANKRUPTCY JUDGE