COBRA notice--bankruptcy--stay. Buchanan v. Golden Casting Corporation Hourly Health Benefit Plan

In an absence of special circumstances, the automatic stay that protects an employer from suit while its bankruptcy is pending does not apply to an action brought against its employee welfare benefit plan under ERISA because the plan, not the employer, is the proper entity to sue for benefits. Similarly, the employer's automatic stay does not apply to the individual fiduciary sued for breach of fiduciary duty in administering the plan. The bankrupt employer has no property interest in either the plan assets or the assets of the individual fiduciary and, therefore, the stay does not protect them from suit.     

Health benefits--reimbursement--state law claim not preempted. Providence Health Plan v. McDowell

A claim to enforce a reimbursement provision or a separate promise to reimburse a plan out of recovery from a responsible third party cannot be brought in federal court under ERISA, because it is a legal claim for monetary damages and ERISA allows fiduciaries to bring suit only for equitable relief However, a claim for reimbursement of medical benefits paid from a third-party settlement is a state law breach-of-contract claim that cannot be removed to federal court and is not preempted by ERISA. Thus, a plan can bring an action in state court for breach of contract against a participant or beneficiary who fails to reimburse the plan for medical benefits paid when he or she recovers from a third party in a settlement or through a judgment, as required by a reimbursement provision in the plan and/or a separate reimbursement agreement.     

Canada's Supreme Court rules no fiduciary obligation towards creditors on insolvency—Peoples Department Stores v. Wise

In Canada, the law is now clear that directors and officers do not owe a fiduciary duty to creditors at the point of insolvency pursuant to corporate and insolvency laws. The Supreme Court of Canada in Peoples Department Stores Inc. v. Wise ruled that the duty of directors and officers under the Canada Business Corporations Act (CBCA) does not change when the corporation is in financial distress and that directors and officers owe their fiduciary duties solely to the corporation at all times. 1 The judgment, which is likely to be the only declaration of Canada's highest court on this issue for some time, leaves a number of unanswered questions for directors and those advising directors of the extent of their obligations both in and outside of insolvency. The Court did find that directors owe a duty of care to creditors, but no fiduciary obligation. The judgment changed the standard of assessment of the duty of care to a purely objective test; enshrined the business judgment rule in Canada; may have provided greater access to the oppression remedy for creditors; and provided direction on the meaning of ‘privy’ with respect to reviewable transactions under the Bankruptcy and Insolvency Act (BIA). 2 These issues are canvassed in this brief case comment. Copyright © 2006 John Wiley & Sons, Ltd.

1 Peoples Department Stores Inc. v. Wise 2004 SCC 68; Canada Business Corporations Act, R.S.C. 1985, c. C‐44, as amended (CBCA).

2 Canada Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‐3, as amended (BIA).

     

Standard approaches to asset & liability risk** **Supported by the Swedish Insurance Federation.

We compare two different models for assets and liabilities for an insurance company that can be considered in the standard approach to solvency assessment and in particular, in determining the required target capital. The first model is suggested by a joint working party by members in CEA, Comité Européen des Assurances, and is based on the duration concept and the second one is an application of ideas by Samuelson and Vasicek.