Pre-bankruptcy LAA Retirees to Keep Medical Insurance Benefits – LAA
APFA is pleased to announce that the 1114 Committee has reached a settlement with the Company that will require it to continue providing retiree medical benefits for those who retired before the bankruptcy under the same terms that existed before the bankruptcy.
The LAA Flight Attendants who lost their pre-funded retiree medical benefits in the AA Bankruptcy in 2012 were angry and disappointed when we lost the arbitration in March 2016. (See: 2016 Hotline – Pre-funding Grievance Denied)
But even more frustrating was that the arbitration decision did not resolve the question that is still unresolved after all these years: Will the employees who retired before the bankruptcy get to keep their Company-funded retiree medical insurance?
The court-appointed 1114 Committee that represents about 50,000 of these retirees has held onto a “claim” in the bankruptcy of $1.4 Billion until that question is answered.
As recently as two weeks ago, the Company was trying to get the 1114 claim released by saying they had no current intention to stop providing those benefits. However, the Committee is concerned with a long-term solution. These benefits will be paid out for the next several decades and, while the current management team may truly have no intention of changing those benefits, the Committee demanded a binding and legally enforceable requirement to continue the retiree medical benefits that existed on the date of the bankruptcy.
To that end, the following Agreed Order was entered by the Bankruptcy court this week:
IT IS HEREBY STIPULATED AND ORDERED
- The Debtors shall continue to provide the “retiree benefits” (as such term is defined in section 1114 of the Bankruptcy Code) claimed in the Retiree Benefit Claims (defined below) in accordance with the provisions of section 1129(a)(13) of the Bankruptcy Code, as set forth in section 8.4 of the Plan and in the Confirmation Order. This satisfies claim nos. 12239, 12462, 12463, and 12893 (the “Retiree Benefit Claims”).
- The Retiree Committee shall withdraw proofs of claim no. 12239, 12462, 12463, and 12893 within three days after the conclusion of the appellate period. Both the Debtors and the Retiree Committee have agreed not to appeal this Order.
- The Court shall retain jurisdiction to hear and determine all matters arising from or related to this Order. (Internal citations omitted)
APFA is pleased with this amazing outcome, and we thank the entire 1114 Committee for their perseverance in getting to this agreement.
APFA Representative on the 1114 Committee
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