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The Peculiar Vulnerability of Municipal Pensions in Chapter 9

posted by Bob Lawless

This may be my byline, but I am posting for Adam Levitin. He is not in his office, and his Apple device is not being cooperative with our blog hosting service. He asked me to post for him, apparently unaware that meant that I would also get to take cheap shots like asking whether he would like to replace his Apple faux-device with a real computer. 

Anyway, Adam writes:

I've written a piece about the peculiar vulnerability of municipal employees' pensions in bankruptcy. It's up on Salon. The key problem is that there is no PBGC insurance for muni pensions, so workers would be SOL if their pensions can be cut in Chapter 9. Many don't even have Social Security. This gap makes me think that pensions ate not really supposed to be fair game in Chapter 9, but that's a somewhat different point than the need to provide PBGC coverage for muni employees and extend ERISA generally to muni retirement plans.

The piece makes some important points and is well worth a read (but don't tell Adam I said that).

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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