Bricklayers & Trowel Trades International Pension Fund v. Wasco, Inc.
This Memorandum Opinion addresses an appeal from the Bankruptcy Court's orders confirming the Debtors' (Wasco, Inc. and Lovell’s Masonry, Inc.) Second Amended Joint Chapter 11 Plan and denying the Appellants' (Bricklayers and Trowel Trades International Pension Fund and International Union of Bricklayers and Allied Craftworkers) motion to dismiss. The Debtors ceased contributions to the Pension Fund, triggering a significant withdrawal liability under ERISA/MPPAA. Despite a D.C. District Court ruling requiring interim payments, the Debtors filed for Chapter 11 bankruptcy, explicitly stating the purpose was to resolve the union issue. The District Court, reversing the Bankruptcy Court, found that the Debtors' actions demonstrated bad faith, citing their press release, evasion of the D.C. court order, and questionable pre-petition insider financial transactions (bonuses, salary increases, and a large transfer to another company while insolvent). Furthermore, the Court concluded that these transactions and the bankruptcy plan itself had a principal purpose to evade or avoid withdrawal liability, violating ERISA § 4212(c), thus making the plan proposed by means forbidden by law and not in good faith under 11 U.S.C. § 1129(a)(3).