Bankruptcy off the rails revisited

By Michael Fraase

Wednesday, 11 May 2005 03:11PM CST

Section: Business

Plane crashAs if the new consumer bankruptcy law wasn’t bad enough, things have taken a weird turn several orders of magnitude for the worse. Yesterday, Federal Bankruptcy Court Judge Eugene Wedoff ruled that United Airlines could terminate its employee pension plans.

So, if you get sick or lose a job, you’ll be paying off your credit card debt for the rest of your life. United, on the other hand just dumped its employee pension obligations—to the tune of US$9.8 billion—on the backs of the electorate. It’s hard to fathom how such a thing could be allowed to happen.

Wedoff’s rationale:

“The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid.”

And United’s workers can’t even strike. Here’s the money shot from the New York Times account:

“The company contends any strikes would be illegal because the rest of the workers’ labor agreements remain in effect. Airline workers are covered by the federal Railway Labor Act, which forbids them to strike as long as labor agreements are in place. Wages and benefits for workers at United have been cut twice while United has been in reorganization.”

United’s is the largest pension default in history, by a factor of three. It will be neither the last nor the largest for long. This is where the domino theory actually works in the real world, folks. If you’ve ever doubted that all law is created to maintain and enhance corporations, kindly smack yourself now.

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