Third Circuit Holds that a Portion of Post-Petition Withdrawal Liability in Bankruptcy Is Entitled to Priority Over General Unsecured Claims

By on October 3, 2011

by Raymond Fernando, Michael Graham, Maureen O’Brien and Maggie McTigue

Recently, the Third Circuit held that withdrawal liability triggered after a bankruptcy filing date may be apportioned to pre- and post-petition service for the debtor, and that the withdrawal liability attributable to post-petition service may be entitled to priority over general unsecured claims under the Bankruptcy Code.  Employers that participate in a multiemployer pension plan should determine the claims impact of withdrawal in light of this court decision and also assess whether filing for bankruptcy protection outside of the Third Circuit is appropriate.

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