Corporations use Bankruptcy Laws to Undermine Workers’ Retirement Security
Representing manufacturing, production, maintenance and sanitation workers in the baking, confectionery, tobacco and grain milling industries.
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06 Jul Corporations use Bankruptcy Laws to Undermine Workers’ Retirement Security

Posted at 09:54h in Corporate Greed, Pension, Retirees Corner by

For BCTGM members who have dedicated their working lives to hard and physically demanding jobs, a defined benefit pension plan is key to the foundation for a financially secure and dignified retirement.

This is why the BCTGM places the highest priority on preserving and strengthening our members’ pensions. Whether it is the highly-respected multi-employer B&C Pension Fund, covering nearly 110,000 active and retired members and which has paid out more than $12.5 billion in benefits since its inception, or the many single employer plans covering BCTGM members across our industries, the BCTGM continues to be relentless in defending BCTGM members’ retirements.

A growing number of employers are waging a full-scale assault on the B&C Fund and BCTGM members’ benefits, seeking to walk away from their longstanding commitments and obligations to their employees, both active and retired. These attacks come on the heels of other significant challenges to our Fund and all multi-employer funds over the past several years.

The 2008 Great Recession, which was brought on by massive Wall Street and banking industry fraud, caused dramatic equity decreases for virtually every multi-employer Fund. For the B&C Fund, which is consistently ranked as one of the very best run Taft-Hartley Funds in the country, the 2008 financial crisis led to a market value decrease of 31 percent, nearly $2 billion.

Congress should’ve learned its lesson when it got rid of important oversight regulations of Wall Street which led to the 2008 Great Recession. Yet, today, the Republican-led Congress is attempting to gut the Dodd-Frank law which was put in place following the 2008 economic crisis to strengthen oversight and controls on Wall Street and protect against another economic catastrophe.

At the same time, Wall Street private equity companies have become a much larger presence in the economy. These predatory companies engage in a process of “strip and flip” whereby they buy a company, saddle it with debt to pay themselves huge dividends and fees, attempt to de-unionize the workforce, slash jobs, close plants and then sell the business for a profit, or abandon the investment and let it fall into bankruptcy.

One of the most egregious examples of their predatory business model is the old Hostess Brands. After the company entered bankruptcy in 2004, the BCTGM worked to keep the company operating with a commitment of $110 million in contract concessions in return for company commitments to make investments in new plant equipment, technology upgrades, marketing and product development. The company emerged from bankruptcy in 2009 operated by a trio of Wall Street private equity companies. These new owners squandered the money from the workers’ concessions, didn’t make the necessary investments and thoroughly reneged on their commitments.

As the business was failing due to severe mismanagement and corporate greed, the owners stopped making their contractually-mandated pension contributions in August 2011, gave the executives raises of 300 percent and then entered bankruptcy and finally liquidation in 2012.

The bankruptcy laws then allowed the company to walk away from its pension obligations totaling almost $1 billion. This nearly $1 billion hole left by the Hostess withdrawal became the second severe blow to the Fund.

Had the federal bankruptcy laws demanded that the court put the interests of workers and retirees first instead of last, this $1 billion hole would have been filled before the banks and Wall Street profiteers got paid. But, because of the flawed bankruptcy laws, this was not the case and the Fund never received any compensation.

More and more corporate executives have turned the bankruptcy process into a cash cow for themselves and a weapon used to drastically reduce workers’ wages, pensions and health care.

Employer misuse of the bankruptcy process is facilitated by courts that have watered down the standards for employer rejection of collective bargaining agreements and termination of health care and pension benefits.

Through the travesty and human tragedy of the old Hostess Brands demise, the BCTGM knows all too well the devastating impact on lives and families brought about when corporate executives abuse the bankruptcy process.

The fight to defend BCTGM pensions is urgent and ongoing. Now, more than ever, retirees, together with union members in every BCTGM shop, must stand up and fight to help secure what this union has worked so hard to achieve over the course of many decades.

BCTGM members and retirees, stay tuned to this website and The BCTGM News for updates on how you can stay involved in this very important effort to defend your BCTGM pension.

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