Summary
holding that a debtor in possession need not comply with the procedures and requirements of Section 1114 if it has the right to terminate or modify benefits unilaterally under the welfare plan in question and non-bankruptcy law
Summary of this case from AMR Corp. v. Comm. of Retired Emps. (In re AMR Corp.)Opinion
Case No. 05-44481 (RDD) (Jointly Administered).
March 10, 2009
MODIFIED BENCH RULING ON DEBTORS' SALARIED OPEB TERMINATION MOTION
THE COURT: I have before me a motion by the debtors in this case for authority under Section 363(b) of the Bankruptcy Code to modify, in various significant measures, what they refer to as "OPEB" but what also can be described as welfare plans, including health and insurance plans, under ERISA. The debtors take the position that notwithstanding that the subject matter of these plans involves reimbursing or providing for the reimbursement of "payments for retired employees and their spouses and dependants, for medical, surgical or hospital care benefits, or benefits in the event of sickness, accident, disability or death," that their request need not, and in fact should not, be governed by Section 1114 of the Bankruptcy Code. The language I was quoting appears in Section 1114(a), which defines, for purposes of Section 1114, the term "retiree benefits."
Bankruptcy Code Section 1114(e) provides that "notwithstanding any other provision of this title, the debtor in possession . . . shall timely pay and shall not modify any retiree benefits," except (as provided in Section 1114(e)(1)(A)) under Sections 1114(g) or (h) of the Bankruptcy Code or, alternatively, if the debtor in possession and the authorized representative of the recipients of those benefits have agreed to the modification of such payments. 11 U.S.C. § 1114(e).
The debtors contend that Section 1114's regime does not apply to the present request because the various welfare plans are, under the terms of the plan documents themselves, modifiable at will. That is, the debtors contend that Section 1114 applies only to vested retiree benefits, or such benefits that can be modified only by operation of the Bankruptcy Code, such as rejection under Bankruptcy Code Section 365, and does not otherwise alter the debtors' pre-bankruptcy rights or agreements, including the right under applicable non-bankruptcy law to modify or terminate such plans at will. To preclude such a modification, therefore, would itself modify the plans.
The debtors have approximately 15,000 present and former employees who would be affected by this motion, many of whom would clearly be affected in very dire ways. The debtors provided notice of the motion by actually sending a copy of it to all of these individuals, and, under the Court's case management order, that notice was sufficient, although it fell within the bare minimum of the twenty days set forth in Bankruptcy Rule 2002(a)(2).
The motion was objected to by approximately 1,600 individuals. There have been, in addition, many slightly untimely objections. Most of those objections were by unrepresented individuals. However, some individuals or groups of individuals have retained quite able counsel to represent them, and I have considered their objections at length, both as submitted in writing and made orally at this hearing.
The objectors essentially make two points. First, they contend that under the plain language of Section 1114, as well as principles of statutory construction, the debtor's interpretation of what constitutes a retiree benefit that is required to be dealt with under Section 1114 is wrong and that, instead, Congress, in Sections 1114(a) and (e), overrode the pre-petition contracts between companies such as Delphi and the beneficiaries of health and welfare plans and required that, before those contracts could be modified — notwithstanding the language in those contracts permitting modification at will — during the course of a Chapter 11 case (at least prior to the effective date of a Chapter 11 plan), the debtor must go through the process set forth in Section 1114 to meet the requirements of either Section 1114(g), for emergency interim relief, or Section 1114(h), for permanent relief.
They also contend, as a factual matter, that the debtors' assertion that the OPEB benefits are modifiable at will is incorrect. Thus, they argue, even if the debtors' interpretation of Section 1114 is right, the debtors' motion should be denied because, in fact, the debtors do not have the right to modify these benefits unilaterally under applicable non-bankruptcy law. They also argue that even if the current factual record has not identified any retirees with vested future benefits, the possibility that such retirees may exist should preclude granting the debtors' motion.
As noted during oral argument, the first issue is an issue that has long been identified by courts and commentators, and one, as the parties have pointed out, where there is conflicting authority. The leading commentator on bankruptcy law, Collier on Bankruptcy, analyzes this issue at some length in 7 Collier on Bankruptcy, ¶¶ 1114.03[1] and [2] (15th ed. 2008) at 1114-15-20. Citing the applicable case law, and to the extent there is meaningful commentary, most of the commentary, as well, Collier reaches the conclusion, in accord with the majority of the courts that have addressed the issue, that a debtor in possession need not comply with the procedures and requirements of Section 1114 if it has the right to terminate or modify benefits unilaterally under the welfare plan in question and applicable non-bankruptcy law: "The section applies only to benefits that have been previously promised by the debtor; it does not create any new obligations on the trustee or debtor in possession." Id. at 1114-16. (Collier notes, however, the conflicting authority and potentially conflicting arguments. Id. at 1114-18.)
The starting point for my analysis is the language of the statute, and that is my ending point, as well, if the provision's meaning is unambiguous and does not lead to a clearly unintended or absurd result. In re Ron Pair Enters., 489 U.S. 235, 242 (1989). But I conclude, particularly in light of two fundamental principles underlying the Bankruptcy Code, as well as my review of the statute, that the provision's language does not compel the interpretation given by the objectors.
Again, that interpretation is that Section 1114 creates a federal law overriding pre-petition contractual rights of the debtors that would permit them to modify or terminate retiree health and welfare benefits during the course of a Chapter 11 case. Frankly, I cannot think of another provision of the Bankruptcy Code that would create such a federal right improving on the prepetition contractual rights of a third-party constituent as a result of the filing of a bankruptcy case.
Perhaps the closest analogy (other than Section 1114(l), which is discussed later) would be Bankruptcy Code Section 546(b), which permits creditors to continue to perfect certain interests for a limited period post-bankruptcy; but even that extension is premised on preserving existing pre-bankruptcy rights that were interrupted by the bankruptcy case. Congress also arguably enacted such a provision when it amended Section 546(c) under the 2005 amendments of the Code, in BAPCPA. Pub.L. No. 109-8, 119 Stat. 23. However, that provision, which refers to a forty-five day reclamation right, has been interpreted by the majority of courts, I think correctly, as not creating a federal right that improves upon creditors' substantive rights under applicable non-bankruptcy law. As Judge Lifland stated in theDana case, reading the amendment to Section 546(c) to have imposed a substantial change to an established pre-bankruptcy right would violate a fundamental tenet of the Bankruptcy Code in that it would enhance the substantive non-bankruptcy rights of one set of creditors at the inevitable expense of other creditors simply because a bankruptcy petition has been filed. See In re Dana Corp., 367 B.R. 409, 418 (Bankr. S.D.N.Y. 2007), which cites, among other cases, Butner v. United States, 440 U.S. 48 (1979), for the basic proposition that property interests in bankruptcy cases are defined by state law or otherwise applicable non-bankruptcy law unless some federal bankruptcy interest requires a different result in recognition that prepetition contract rights and property interests should not be analyzed differently or enhanced simply because an interested party is involved in a bankruptcy case.
Although it has not otherwise re-written prepetition contracts to add rights against debtors, Congress has given certain prepetition claims priority (for example domestic support obligations and certain employee and benefit plan claims, in Bankruptcy Code Sections 507(a)(1) and 507(a)(4)-(5), respectively). But, in considering claims to be accorded priority treatment in bankruptcy, courts have consistently relied on a second, related fundamental bankruptcy principle against which the objectors' interpretation of Section 1114 also collides. That is, as the Second Circuit recently reiterated in In re Bethlehem Steel Corp., 479 F.3d 167, 172 (2d Cir. 2007), given the debtor's limited resources are presumptively to be equally distributed in bankruptcy cases among creditors, statutory priorities must be narrowly construed. This is because bankruptcy is ultimately a zero sum game: whatever is added as a priority to one constituent's claim comes out of the other similarly situated constituents' pockets. Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 547 U.S. 651, 667 (2006).
I believe that Congress is fully aware of these fundamental principles when it amends the Bankruptcy Code, and, accordingly, that when Congress amended Section 1114 it was not writing on a clean slate. Dewsnup v. Timm, 502 U.S. 410, 419 (1992). Thus, one must be reluctant to accept arguments that would interpret Section 1114 to effect a major change in pre-Code practice if that change was not the subject of at least some discussion in the legislative history. Id.
Everyone understands the origin of Section 1114. It grew out of the suspension of health and welfare benefits by LTV Corporation, after it filed its bankruptcy case, in the belief that it had the duty to do so because Section 1113 of the Bankruptcy Code didn't apply, and, therefore, it need not pay benefits under such prepetition agreements unless they were assumed under Section 365 of the Code. That is, Bankruptcy Code Section 1113 had been enacted to make the rejection of collective bargaining agreements more difficult, but there was no similar limitation on rejecting retiree benefits. See generally 7 Collier on Bankruptcy ¶ 1114.01[3], at 1114-11-12.
Congress reacted to LTV's decision by drafting what eventually became Section 1114. Id. But, as was made clear over seventeen years ago, the issue of whether Congress went beyond precluding a debtor to cease performing its welfare and benefit agreements without going through the process delineated in Section 1114 to actually precluding a debtor from exercising the non-bankruptcy law rights to modify or terminate those agreements was viewed as open under the statute. See In re Ionosphere Clubs, 134 B.R. 515, 517 (Bankr. S.D.N.Y. 1991) ("[Section 1114] has spawned diverse and sometimes inconsistent interpretations and theories as to the substantive and procedural standards necessary for modification of retiree benefits. Expressed colloquially, these interpretations are all over the lot.").
In re Doskocil Cos., Inc., 130 B.R. 870 (Bankr. D. Kan. 1991), first addressed the issue directly and concluded that Section 1114 does not apply to modifications to retiree benefits that the debtor has the right to modify or terminate at will under applicable non-bankruptcy law. Id. at 877. Doskocil relied heavily, however, although not entirely, on In re Chateaugay Corp., 945 F.2d 1205 (2d Cir. 1991), cert denied 502 U.S. 1093 (1992). Chateaugay involves, as the objectors point out, the issue raised by a modifiable agreement, but an agreement that, post-bankruptcy, terminated by its terms. However, the Second Circuit's analysis, consistent with Butner, focused on the pre-petition non-bankruptcy law rights of the parties and did not envision, except in the dissent, that Congress created a new federal right under the predecessor of Section 1114 (which for all intents and purposes, I view as equivalent to Section 1114 on this issue) that effectively froze the debtor's retiree obligations as of the petition date regardless of the debtor's prepetition contract rights. In re Chateaugay Corp., 945 F.3d at 1208-09.
Doskocil has been cited favorably by a number of courts, perhaps the most on point being the District Court of New Jersey in In re New Valley Corp., 1993 U.S. Dist. LEXIS 21420 (D. N.J. Jan. 28, 1993). See also In re North Am. Royalties, Inc., 276 B.R. 860, 866 (Bankr. E.D. Tenn. 2002) ("Section 1114 . . . says nothing about whether the debtor can exercise a power reserved in the contract to terminate it and thereby end any obligation for retiree benefits as defined in § 1114(a). Despite § 1114, the debtor can terminate the contract as allowed by the terms."); In re CF I Fabricators of Utah, Inc., 163 B.R. 858, 574 (Bankr. D. Utah 1994) ("The Bankruptcy Code does not create new rights upon filing bankruptcy that were not in existence prior to filing."), appeal dismissed, 169 B.R. 984 (D. Utah 1994); In re Lykes Bros. Steamship Co., Inc., 233 B.R. 497, 517 (Bankr. M.D. Fla. 1997) (retiree benefits were terminable at will and effectively terminated during the chapter 11 case without requirement to comply with Section 1114).
Doskocil was, however, rejected by the analysis of the Bankruptcy Court for the Western District of Missouri in In re Farmland Indus., 294 B.R. 903 (Bankr. W.D. Mo. 2003). An unpublished opinion in the Ames Dep't Stores case by Bankruptcy Judge Conrad also took the view that Section 1114 appears to apply to contractually modifiable benefits, as did the District Court in that case. In re Ames Dep't Stores, Inc., 1992 U.S. Dist. LEXIS 18275 (S.D.N.Y. Nov. 30, 1992), vacated on other grounds, 76 F.3d 66 (2d Cir. 1996). However, in the context of a ruling on a fee application related to that dispute in the Ames case, the Second Circuit noted in dicta that both of those decisions were made without any reference to any of the case law or analysis that I have just summarized; and, while the Second Circuit did not rule how it would come out on the interpretation of Section 1114's applicability to unvested, modifiable-at-will rights, it noted favorably the numerous authorities supporting the debtors' position. In re Ames Dep't Stores, 76 F.3d at 71. In addition, Bankruptcy Judge Conrad, himself, in In re Drexel Burnham Inc., 138 B.R. 723 (Bankr. S.D.N.Y. 1992), favorably cited both Doskocil and Chateauguay when approving confirmation of a chapter 11 plan that permitted the modification of retiree plan benefits at will consistent with the debtor's pre-petition plan documents. Id. at 763.
The objectors have pointed out that Judge Conrad's ruling, which appears to reflect an about-face from his unreported ruling in Ames, is properly viewed as being under Bankruptcy Code Section 1129(a)(13), not section 1114, and that Section 1129(a)(13) can be read to say that no matter how Section 1114 applies to OPEB benefits arising before the effective date of a chapter 11 plan, a chapter 11 plan itself need only preserve such benefits as they exist in that welfare plan and go no further. Thus, if those benefits are modifiable or terminable at will, the objectors concede that Section 1129(a)(13) will not enhance the rights of plan beneficiaries to preclude such modification or termination. That is, I think, the correct interpretation.
Whether this interpretation of Section 1129(a)(13) supports the objectors' position on Section 1114, however, is another matter. Contrary to their interpretation of Section 1114, it strikes me as odd that Section 1114 would give broader rights to the beneficiaries of welfare plans for the limited postpetition pre-confirmation period than, as the objectors concede, Section 1123(a)(13) does for the much more significant period after the chapter 11 plan goes effective — the chapter 11 plan being the primary focus of chapter 11 negotiations. I would rather harmonize the two provisions, that is, Sections 1129(a)(13) and 1114, by taking the view that each recognizes that the debtor's obligations under retiree benefit plans that are modifiable at will are qualified by a right under non-bankruptcy law to modify or terminate. See In re N. Am. Royalties, Inc., 276 B.R. at 867, in which the court noted that if Sections 1114 and 1129(a)(13) prevent termination as allowed by the contract, Congress created a system for chapter 11 debtors that it did not impose outside of chapter 11 under ERISA, a system, moreover, that would provide better treatment for such benefits than pension benefits under a collective bargaining agreement. "Congress could have intended these unusual results, but the court will not attribute that intent to Congress without convincing evidence, which does not exist. Instead, the court understands that § 1114 and § 1129(a)(13) were enacted against the background of ERISA, which allows a contract for retiree welfare benefits to provide the employer the right to terminate." Id. (It should be noted that the one case that specifically rejected the Doskocil approach, apparently interpreted Section 1129(a)(13), contrary to Drexel and other cases taking the same position (see In re Lykes Bros. Steamship Co., Inc., 233 B.R. at 517; In re Federated Dep't Stores, Inc., 132 B.R. 572, 575 (Bankr. S.D. Ohio 1991)), as precluding post-effective date modification. In re Farmland Indus., 294 B.R. at 917-18; see also In re Ormet Corp., 355 B.R. 37, 43 (S.D. Ohio 2006) ("Section 1129 simply requires that a plan provide for the same level of retiree benefits that § 1114 protects after the bankruptcy petition is filed." The bankruptcy court had found Section 1129(a)(13) was satisfied because it was modifiable at will, an issue that was not appealed.))
The objectors also point to another provision of the Bankruptcy Code, Section 1114(l), to support their view that at least in this one area Congress intended to rewrite a debtor's prepetition agreements in favor of a particular constituency merely as a result of the filing of the bankruptcy petition. Section 1114(l) was enacted in 2005 pursuant to the BAPCPA amendments; it permits the court on the motion of a party in interest and after notice and hearing to reinstate benefits that were modified during the 180-day period preceding the filing of the bankruptcy petition, unless the court finds that the balance of the equities clearly favors such modification. Thus, the objectors correctly argue, this provision does represent an intrusion by Congress, contrary to the principle set forth inButner and the foregoing cases, into the parties' prepetition contractual relations, one that is not, moreover, like intrusions under Sections 547 and 544 and 548 of the Code, which are for the benefit of the debtor's estate generally, but, rather, is only for the benefit of a discrete group — retirees under benefit plans.
Section 1114(l), however, does not specifically deal with the issue of plans modifiable as of right and could conceivably apply to pre-bankruptcy breaches by debtors in financial distress of vested rights. More importantly, even if it does also apply to modifiable plans, I do not view Section 1114(l), which applies to a specific type of prepetition action, as overruling Doskocil and the line of cases that follow it, which apply to postpetition actions, nor does there appear to me to be any legislative history or other policy statement accompanying the 2005 amendment that would clearly set forth Congress' intention generally in Section 1114(l) to override, beyond its specific terms, the fundamental principle that bankruptcy does not give new rights to individual parties in interest or to cut back on the tenet set forth by the Supreme Court in Butner. I note in this regard that after BAPCPA's enactment of Section 1114(l), a bill was introduced in the House of Representatives that would have overturned the Doskocil interpretation of Section 1114, but it was not enacted. See H.R. 3652, 110th Cong. § 9 (2007), which would have added the following clause at the end of Section 1114(a): ", whether or not the debtor asserts a right to unilaterally modify such payments under such plan, fund or program." Section 1114(l), then, can just as easily suggest that Congress restricted special "vesting" under Section 1114 to the limited circumstances set forth in the BAPCPA amendment, and, in a broader sense, that Congress had actual knowledge of the Doskocil majority rule when it enacted BAPCPA in 2005 and failed to take action to alter the judiciary's interpretation of and general adherence to it.
For those reasons I believe that the debtors' interpretation of Section 1114 is the correct one, and that, if, in fact, the debtors have the unilateral right to modify a health or welfare plan, that modifiable plan is the plan that is to be maintained under Section 1114(e), with the debtors' pre-bankruptcy rights not being abrogated by the requirements of Section 1114.
The second issue raised by the objectors is an interesting issue to put in context, given the Second Circuit's guidance in In re Orion Pictures Corp., 4 F.3d 1095 (2d Cir. 1993), on the limited nature of summary proceedings, including those under Section 363(b). I believe, given the interplay here of Section 363(b) with Section 1114, however, that before a bankruptcy court should permit a debtor to modify or terminate a health or welfare plan under Section 363(b) on the theory that it has the right to do so under applicable non-bankruptcy law, the debtor must make a significant showing that it, in fact, has such a unilateral right and that the benefits are not vested.
That is what the debtor has done here, however. Given the benefit plan documents, including the summary plan descriptions, or SPDs, and the absence of any evidence in this record that would indicate that the debtors otherwise promised, or the debtors' predecessors otherwise promised, to the beneficiaries of those plans who are affected by this motion, that, notwithstanding the language in the Delphi plan documents, those plans are not modifiable at will. The only evidence that has been submitted to counter the language in the Delphi plan documents (including the SPDs) pertains to the plans of GM Corporation, the debtors' predecessor. Those documents, however, all predate the decision of the Sixth Circuit in Sprague v. General Motors Corp., 133 F.3d, 388 (6th Cir. 1998), which found GM's plan to be modifiable. Given that record, it appears to me that the debtors have very clearly made the showing that they have the right to modify the plans at will.
The objectors contend that since this Court sits in the Second Circuit it should be bound by Second Circuit law on this issue, and that under Second Circuit law, at least in some respects pertaining to promises by a predecessor corporation such as GM may be viewed differently from the holding of the Court of Appeals in the Sixth Circuit's Sprague case. No one has briefed for me the choice of law issue and I've not considered it at length, although I assume that general federal law applies to what is ultimately a question under ERISA. In any event, I have two observations. The first is that after the issuance of theSprague en banc opinion in January of 1998, it would seem to me that any subsequent employee of Delphi who had been covered by a GM plan would clearly be on notice of the Sprague decision and how to interpret the language that existed in the GM plans prior to his or her transfer to Delphi, and that that notice would be, I believe, clear that the types of provisions that have been submitted to me, for example, in Exhibit 80, would not suffice to create a vested benefit right. The employees whose benefit rights were actually determined by Sprague would, moreover, appear to be bound by that decision.
Secondly, as set forth I believe most recently by the Second Circuit in Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55 (2d Cir. 2006), but also in a number of District Court decisions that have come down since then, including Warren Pearl Constr. Corp. v. Guardian Life Ins. Co. of Am., 2008 U.S. Dist. LEXIS 101780 (S.D.N.Y. Dec. 9, 2008), and Eagan v. Marsh McLennan Cos., Inc., 2008 U.S. Dist. LEXIS 6647 (S.D.N.Y. Jan. 29, 2008), the law in the Second Circuit, although it may differ somewhat from the Sixth Circuit, is still very restrictive when considering whether to give beneficiaries of welfare plans rights that are not set forth by a clear, affirmative promise in the plan documents, or through, for example, a theory of promissory estoppel. See also Robinson v. Sheet Metal Workers' Nat'l Pension Fund, 515 F.3d 93, 99 (2d Cir. 2008).
So again, on this record, it appears to me clear that the debtors have met their factual burden, which I view as a serious one, to take this motion outside of the ambit of Section 1114.
I view the burden to be so serious (and also recognize that the notice here, while sufficient as a legal matter, was sufficient only to permit fairly recent involvement by counsel in a fairly abstruse area to develop the record) that I believe, however, that I should exercise my authority under Section 1114(d) to appoint a committee of retirees to act as a representative notwithstanding my belief that the debtors, on the basis of this record, are not bound by the 1114 regime generally. I believe that it would be appropriate, given the importance of the factual issues and the timing of this motion, to give that committee a specific charge, which is to review the factual record to determine whether, under the logic that I've just set forth with regard to vesting under ERISA, and notwithstanding the language in the plan documents, there is any group of beneficiaries of these plans, any retirees, who would have vested rights, notwithstanding the language of the plan documents and notwithstanding the Court's conclusion that following Sprague they were on notice as to the inefficacy of the argument that the documents addressed in Sprague overrode the ability of GM to terminate the benefits at will or to modify them at will, to the extent that they were not actually bound by theSprague ruling.
I believe, given the very clear expertise and active, although recent, involvement of the three counsel for objector groups, and the great number of objectors, that the U.S. Trustee can form such a committee out of the people who are participating in the courtroom today and that the committee can move promptly to conduct its analysis and meet and confer with the debtors on whether, in fact, there would be, under my logic, a retiree or retirees who would be covered by Section 1114.
I should make it clear that service as a representative on this committee would not preclude any individual party's right to appeal my ruling, so that, although they would be fulfilling this task, they would not be deemed to have agreed with the first part of my ruling, which is that Section 1114 doesn't apply to this motion unless there is a vested benefit.
The work of that committee on this point should be done so that any argument that would be made to modify my provisional ruling would be heard on Wednesday, March 11 at 10 o'clock. And I'm assuming that would mean that some formal pleading would be filed in the preceding week and that there would be a dialogue with the debtors. I take the debtors at their word that if, in fact, retirees are identified who do have vested benefits, they would go through a Section 1114 process with them. And so I think there should be an ongoing dialogue with the debtors on that point.
I also believe that this committee should be authorized to at least explore with the debtors the cost and ability to utilize the federal tax credit identified by one of the objectors.
I have debated whether to set a finite budget for the committee's actions or merely a budget that I believe would be sufficient to get them to a position where they might convince me of the merits of exceeding that budget in a subsequent fee application. I've decided to do the latter, and that the budget, which I don't view as a license to spend but merely as what I believe clearly would be sufficient for this task, would be 200,000 dollars.
As far as the preliminary grant of the motion, having dealt with what I believe are the two main legal issues, let me ultimately deal with the standard that I believe emerges from that analysis, which is whether the debtors have satisfied good business judgment under Section 363(b) of the Bankruptcy Code in modifying the OPEB programs as set forth in their motion. See In re Orion Pictures, 4 F.3d at 1099; In re N. Am. Royalties, 276 B.R. at 766.
It is crystal clear to me, on this record and my understanding of the case, that, at this time, and for the foreseeable future, the debtors are well within their business judgment in assuming that they will need to eliminate the projected OPEB liability, which is projected to be in excess of 1.1 billion dollars, from their balance sheet in order to reorganize.
I also believe, on this record, that given the debtors' serious need to conserve cash and all of the other steps they have taken to do so, as detailed primarily in Mr. Miller's declaration, as well as my knowledge of the current funding of the debtors, that every dollar counts for these debtors, and, therefore, that the savings of 1.5 million dollars a week and projected cash savings of seventy million dollars a year for the pre-plan period, the period prior to the effective date of a reorganization plan, is also of extreme importance to the debtors, and that actions taken by the debtors to save such money, including by modifying these benefits, are taken in good business judgment in light of the rights, as I see them, of the retirees.
The debtors, I believe properly, did not take this step for almost four years given their assessment of the business realities of their operations, the inducement to employees of having such benefit plans in place, and their desire to maintain good relations with their retirees. But over the last two or three months their business, like the auto business generally, has gone through such enormous adverse changes that I recognize that such changed circumstances lead them to make this decision now.
So I will enter an order granting the motion, including permitting the debtors to take the initial steps to implement it. Those initial steps, as far as they consist of giving notice to employees, should also note that there is this procedure in place to determine if anyone is, in fact, vested. And also the order will provide for an opportunity for a hearing on March 11 to convince me, consistent with the parameters that I've outlined in this ruling, that there are individuals or groups of individuals who in fact may be properly vested and therefore would be covered by Section 1114.
Given the time constraints here, I'm not going to require the debtors to settle that order but I think you should work it out first with the U.S. Trustee and then promptly circulate it to the counsel who've been active in this hearing and then submitted to court. Thank you.