Federal and state law clash again in a pending bankruptcy case but this time it is over pension plans. Facing millions of dollars in debt, Stockton, California filed for relief under Chapter 9 of the US Bankruptcy Code in June. Two bond companies are arguing that the city is improperly funding employee pension funds while not paying its debts.
State law protects employee pensions; however, federal bankruptcy law may trump state law resulting in the pension plans being impaired. Employees of other debt-laden cities need to follow this bankruptcy case closely to see what happens to the employee pension accounts. Read Full Article.
Speak Your Mind