“The Oneida Decision: Second Circuit Holds Premiums Payable to PBGC Not Dischargeable in Bankruptcy”

In an important decision published in April 2009, the Second Circuit, reversing a decision by the United States Bankruptcy Court for the Southern District of New York, held that premiums payable to the Pension Benefit Guaranty Corporation following the termination of a defined benefit pension plan during a chapter 11 case do not arise until after the debtor’s emergence from bankruptcy and therefore are not dischargeable as unsecured prepetition claims. The Second Circuit is the first court of appeals to address this issue. This article looks at the Oneida decision and its implications for debtors contemplating bankruptcy, regardless of where that bankruptcy may be filed.

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