The Labor Department supports a motion by United Airlines' independent fiduciary that seeks to collect contributions for the carrier's pension plans, according to a motion filed in U.S. Bankruptcy Court in Chicago by Labor Department attorneys. In the filing, the attorneys asked the court to be allowed to file a brief supporting the fiduciary's request.
Independent Fiduciary Services filed a motion with the court on Nov. 30 seeking to force the airline to make at least $260 million and as much as $994 million in contributions on behalf of its in pension plans, which have assets totaling about $6.9 billion. The fiduciary asked the court to categorize the contributions that parent company UAL Corp. has not paid since July as "administrative expenses," which would grant them a higher priority in the Chapter 11 case.
The Labor Department motion said the court's decision on this matter "is likely to have a significant impact on the development" of ERISA laws, calling the issue "critically important."
A hearing on the Labor Department request is slated for Dec. 17, and objections are due Friday. The filing said the agency "has a deep interest" in the airline's Chapter 11 reorganization proceedings. UAL and United filed for bankruptcy protection in December 2002.
Jean Medina, United spokeswoman, reiterated the carrier's stance that nothing in federal pension law or the tax code requires a company in Chapter 11 bankruptcy protection to continue contributing to its pension fund. She also noted that United officials believe the pension contributions are not administrative expenses and are not entitled to priority status.
