Over the past five years, courts have issued rulings of potential concern to buyers of distressed debt.
The U.S. Seventh Circuit Court of Appeals recently issued its opinion in George v. Kraft Foods Global, Inc., No. 10-1469 (7th Cir. April 2011), impacting fiduciaries to defined contribution retirement plans such as 401(k) plans.
On April 11, 2011, a divided Seventh Circuit panel reversed summary judgment in favor of Kraft Foods Global, Inc. in a class action ERISA breach of fiduciary duty case involving “excessive fees” claims in connection with Kraft’s 401(k) plan.
In Central States, Southeast and Southwest Areas Pension Fund v. Auffenberg Ford, Inc., --- F.3d ---, 2011 WL 832937 (7th Cir. Mar. 11, 2011), the court held that an oral understanding, even if later committed to writing, cannot alter an employer’s written agreement to make contribution payments to a multiemployer fund.
In Matschiner v. Hartford Life & Accident Ins. Co., 2010 WL 3910217 (8th Cir. Oct. 7, 2010), the Eighth Circuit applied the “plan documents rule” established by the Supreme Court in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 129 S.Ct. 865 (2009), and concluded that Hartford properly paid benefits pursuant to a beneficiary designation form rather than a Nebraska state divorce decree that purported to divest the decedent’s ex-husband of his right to the benefits.
Last Wednesday, the Eighth Circuit Court of Appeals issued a decision (Braden v. Wal-Mart) that lowers the bar for class action attorneys to bring claims alleging that 401(k) plans charge and improperly disclose excessive fees.
On March 9, the U.S. Supreme Court granted certiorari in Jones v. Harris Associates L.P., 527 F.3d 627 (7th Cir. 2008).
On Monday, March 9, 2009, the United States Supreme Court granted the plaintiffs’ petition to review the case of Jones, Jerry N., et al. v. Harris Associates, L.P.
On February 12, 2009, the U.S. Court of Appeals for the Seventh Circuit issued its opinion in Hecker v. Deere & Co.
In recent opinions, the United States Courts of Appeals for the Fifth and Seventh Circuits have revisited the doctrine of equitable subordination and have underscored the requirement that, before a court can equitably subordinate a creditor's claim, the court must find that other creditors have been harmed by the actions of the creditor.