Interesting article from the Associated Press via BusinessWeek Online: “Airlines Face Pressure Over Pension Relief.” Excerpt:
William J. Rochelle, a bankruptcy lawyer with Fulbright and Jaworski in New York, said Congress needs to devise some way for airlines and other businesses, such as automakers and truckers, to lighten their pension burden outside of bankruptcy court, where workers’ retirement benefits are quite likely to be gutted at the hands of banks and other creditors.The current system isn’t fair to retirees, Rochelle said, in that they lose their pensions and any money they had invested in the company’s stock, which typically becomes worthless during the bankruptcy reorganization. Investors, on the other hand, are able to snap up debt at pennies on the dolllar and then can profit if the company recovers and their debt is converted into equity in the new company.
“Right now our system is creating a transfer of wealth from retirees to junk bond investors,” he said.