Local 512
Prefunding Update
Hey Everybody,
In November 2015 our dispute about the company's match for our prefunding was heard by an arbitrator. In February 2016, the arbitrator ruled against us saying that because the company never went through the 1114 process in bankruptcy process the grievance and the arbitration were untimely.
Last year, the company wanted to voluntarily dismiss the Adversary Proceeding on this matter and sought the TWU’s agreement in that dismissal. The TWU refused and the company submitted the issue to the System Board that retained jurisdiction on the matter.
The Union’s position was that continuing the 1114 process was mandatory and thus the dismissal of that proceeding would constitute the “successful resolution” that was needed to trigger the distribution of the company’s match of the prefunding funds as outlined in attachment 41.1 of the Title II and the Title II contract.
The company’s position was that their dismissal of the Adversary Proceeding did not constitute a “successful resolution” of the 1114 process and was under no obligation to distribute the funds in the prefunding trust.
The arbitrator’s decision came down to whether the company’s action to withdraw its legal action would constitute a successful resolution of the 1114 process or just conclude the case. He decided that the “ voluntary dismissal of the 1114 process will not trigger an obligation under the collective bargaining agreement to distribute the matching contributions at issue in this case to any of the active TWU represented employees and/or post October 31,2012 retirees who previously participated in the prefunding program.”
At this point we have lost both arbitrations regarding the distribution of the company’s match of our prefunding money and each defeat puts that distribution a little farther from our reach.
It’s interesting to note in the decision that the company consciously decided against entering the 1114 process because “the merger with USAir was growing more probable and that would have made the bankruptcy so successful that prevailing on a Section 1114(g) motion would create claims for the retirees that would be paid at 100 cents on the dollar, so American would be better off not filing such a motion because it would not ultimately reduce its liabilities.” (Page 13 of the attachment.)
The full decision is attached to this post.
Please work smart and stay safe.
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