By: Daniel J. Opisso
St. John's Law Student
American Bankruptcy Institute Law Review Staff
Recently, in In re Visteon, the Third Circuit held that a chapter 11 debtor had to follow section 1114 of the Bankruptcy Code when terminating a retiree benefit plan, notwithstanding the terms of an existing collective bargaining agreement (“CBA”) that permitted unilateral termination. At the time Visteon filed for chapter 11, the CBA provided that retired employees would receive medical benefits until death. However, the CBA gave Visteon the discretionary power to unilaterally terminate or modify any retiree benefits at any time. Despite Visteon’s apparent reservation of the right to terminate retiree benefits, the Third Circuit held that Visteon could not do so in its bankruptcy case without complying with section 1114, which sets forth a specific procedure for termination or modification of retiree benefits.