CF&I Steel Corp. v. Conners (In re CF&I Fabricators of Utah, Inc.), 163 B.R. 858 (Bankr.D.Utah)
PUBLISHED
CF&I sold two mines to Wyoming Fuel in 1983. Under a collective bargaining agreement ("CBA") between CF&I and the United Mine Workers of America, CF&I was obligated to require any successor to its operations to assume its obligation to pay non-pension benefits to retirees. Rather than requiring Wyoming Fuel to assume that obligation in the sale, CF&I agreed to continue providing those benefits itself. After the sale, CF&I paid non-pension retiree benefits to its former employees until October 1992, which was nearly two years after the filing its chapter 11 petition. The court found that, since Wyoming Fuel was a "successor," the CBA was terminated by the sale, and CF&I had no contractual liability to provide non-pension benefits after the sale, although CF&I had breached the CBA by failing to require Wyoming Fuel to assume its benefits obligation. The court also considered whether CF&I was obligated to pay retiree benefits pursuant to 11 U.S.C. § 1114. However, since CF&I did not enter bankruptcy with either a contractual or common law duty to pay retiree benefits, the court ruled that CF&I's confirmed plan of reorganization did not impermissibly alter or modify rights prohibited by § 1114 by failing to provide for payment of retiree benefits. Since neither CF&I nor Wyoming Fuel was obligated for post-sale benefit payments, the court determined that the 1974 Benefit Plan (a non-pension benefit trust fund) was liable for those benefits. CF&I asserted claims against the 1974 Benefit Plan, under 11 U.S.C. §548 and 549, seeking to avoid the post-sale benefit payments it had made. The court determined that, with respect to prepetition benefit payments, all of the elements (reserving the issue of insolvency) of § 548(a)(2)(A) avoidance had been established. Post-petition benefit payments were voidable under § 549, as they were neither allowed under Title 11 nor authorized by the court. Finally, since the 1974 Benefit Plan was legally responsible for post-sale benefit payments, the court held that § 550(a)(1) allowed recovery from it of post-sale payments that were made by CF&I, because the facts established that the 1974 Benefit Plan was an entity for whose benefit the payments were made. Moreover, § 550(a)(1) does not require that the payor intend the benefit in order to avoid the payment. Lowrey v. First Nat'l Bank (In re Robinson Bros. Drilling, Inc.), 97 B.R. 77 (W.D. Okla. 1988), aff'd sub nom. Hanover Leasing Corp. v. Lowrey (In re Robinson Bros. Drilling, Inc.), 892 F.2d 850 (10th Cir. 1989).