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Creditors committee backs continued payment to beneficiaries
The Official Committee of Unsecured Creditors of the NMI Retirement Fund does not object to the Fund’s request that it be allowed to continue paying benefits to beneficiaries at the 100 percent level while it awaits the court’s entry of the dismissal of the Fund’s Chapter 11 bankruptcy petition.
The Hawaii-based committee’s counsel, Don Jeffrey Gelber, said what the committee understands about the Fund’s proposal is that the Fund is authorized to pay retirees and other Fund beneficiaries in the same manner that the Fund made payments before the bankruptcy filing and for the first two months of the bankruptcy proceeding.
Gelber filed yesterday in the U.S. District Court for the NMI Bankruptcy Division the committee’s response to the Fund’s proposal for continued payment.
The lawyer said the committee recognizes that, if the Fund does not recover sufficient funds to pay all current and future Fund beneficiaries, full payments to current beneficiaries may be prejudicial to those “at the back of the line” (i.e., future retirees or other future Fund beneficiaries).
Gelber said the committee does not object to the relief requested by the Fund because it will be least disruptive to the current beneficiaries who depend on continued payments for food, shelter, medical, and other living expenses.
Gelber said the continued full payment to beneficiaries at the pre-bankruptcy level is consistent with the Fund’s pre-bankruptcy and post-bankruptcy conduct and is consistent with the payments that would have been made had the bankruptcy proceeding not been filed.
Gelber said the continued payments at the pre-bankruptcy level is consistent with the bankruptcy court’s determination that the Fund was not eligible to file for Chapter 11 protection and the court’s decision that the proceeding will be dismissed following the resolution of some administrative matters.
The lawyer said the committee understands that the proposed payments will only be made for a short period of time before the court’s dismissal order is entered.
The Fund’s proposal for continued payment will be heard on June 26 at 9:30am.
In the Fund’s request, Fund counsel Jeremy B. Coffey cited that prior to the filing date of the Chapter 11 petition (April 17, 2012), the Fund established a subsidiary, Pension Holdings Corp., for the purpose of ensuring the continued payment of benefits, in full, for up to the first two months of the case.
With the June 2012 payment, Pension Holdings Corp. has now exhausted its funding and is no longer able to satisfy the Fund’s semi-monthly payment obligations, Coffey said.
The next payment schedule is on or before July 1, 2012.
Coffey explained that if the Fund is unable to resume benefit payments until after the order of dismissal is entered, it would cause undue hardship on Fund members who rely on benefit payments to meet basic food, shelter, clothing, and medical needs.
“Through this proposal, the [Fund] seeks limited authority to resume benefit payments, beginning with the July 1, 2012, payment, until such time as the order dismissing this case is entered,” the lawyer said.
