The latest iteration of the Sun Capital litigation has confirmed once again what many restructuring professionals have known for a long time – that pension liabilities have a nasty habit of kicking investors where it hurts, often when least expected. Our recent blog
explains the decision and provides some insights on the case. One of those insights is that the case provides a “road map” for joint investors that want to isolate withdrawal liability in a portfolio company.
But it’s one thing to be able to switch on a force field to protect against exposure to pension liabilities; quite another to deal with pension liabilities once you’ve got them. However, the US Supreme Court’s decision in Jones v Municipal Employees’ Annuity and Benefit Fund of Chicago
affirms that pension liabilities can be legitimately bargained away or waived through a collective bargaining process, “creating a wormhole through the black hole”. There is no underestimating how challenging a negotiation that would be, especially for a city like Chicago, but the possibilities are there – a wormhole has been created in the black hole. The decision is analysed and considered in this recent blog