As we recently announced, DALRC hired counsel to advise us and represent the interests of non-pilot participants in the Delta Family Care Retirement Plan. What follows are some questions and answers about why we took this step, and what it means.
Q: Why did DALRC hire counsel?
A: Although we hope Delta is successful in staying out of bankruptcy, it may be necessary for Delta to file Chapter 11. In a Chapter 11 bankruptcy case, participants in the Delta Family Care Retirement Plan will need representation to better protect their interests . Other, well-represented creditors could end up receiving better treatment.
Q: Who did DALRC hire?
A: We hired as co-counsel lawyers from two firms, Townsend and Townsend and Crew, LLP (www.townsend.com) and Farella, Braun, and Martel, LLC (www.fbm.com) who have specialized expertise, including benefits litigation, ERISA, and bankruptcy reorganization, which we thought would be helpful.
Q: Does this pit DALRC against Delta?
A: No. The interest of our members is, overwhelmingly, that Delta survives and thrives. If Delta files bankruptcy, the most important outcome for our members is that Delta's Chapter 11 reorganization is successful. And in the bankruptcy, through our attorneys, we have the opportunity and mechanism to support various motions brought by Delta in the bankruptcy court. Given some of our members' situation-retirees and active employees with an under-funded defined benefit pension plan-the bankruptcy judge may give great weight to our support of Delta management on critical issues where it is appropriate.
Q: Won't this be very expensive?
A: Our lawyers have agreed to provide us some initial services under very attractive terms. If Delta files bankruptcy, and if an official committee of employees or retired employees is appointed in the case, Delta would pay the cost of the committee's counsel.
Q: Well, wouldn't that be expensive for Delta, when they need to save money in the bankruptcy case?
A: We would expect that counsel for the employees or retired employees would be a tiny drop in what would unfortunately be a very large bucket of legal and professional fees that Delta would pay in a bankruptcy.
Q: If we do not join the DALRC, will Delta represent us in the event the pension plan is turned over to the PBGC?
A: No. As noted by the Delta legal counsel in the response found in the Grinstein meeting notes on our website from the June meeting with the DALRC board, Delta will not be able to represent us in the event of a bankruptcy filing if the pension plan is turned over to the PBGC.
Q: Why do employees need representation? Won't Delta look out for our interests?
A: Delta has looked out for its employees and retired employees in very difficult times, and in return we have made sacrifices that we understood were necessary for the survival of the company. We expect that to continue, even in a bankruptcy. However, other creditors may insist that employees bear a greater share of sacrifices: For example, other creditors may insist that Delta terminate its under-funded pension plans or cut employee health benefits. The non-pilot employees need a voice during negotiations over a bankruptcy reorganization plan, or the other creditors may insist that, when difficult choices have to be made, the employees should always make the sacrifices.
Q: Is it correct that the leaders of the Delta legal team currently charged with representing the active employees in the event of a bankruptcy are protected by a SERP therefore bankruptcy will have little impact on their own individual retirement benefits?
A: Yes. While not all Delta lawyers received a SERP, the leaders of the legal department of Delta have received SERPs which have protected their retirement benefits, unlike most Delta people.
Q: Can't Delta just modify health benefits anyway? What good will having lawyers do?
A: Even if Delta could modify some of the health benefits outside bankruptcy, Congress passed special legislation that protects certain benefits once a bankruptcy is filed, including health and insurance benefits for retirees, their spouses and dependants: If Delta is in bankruptcy, before they can terminate or modify those benefits, Bankruptcy Code section 1114 requires Delta to negotiate changes to the benefits plan with a committee appointed by the bankruptcy court that represents, for example, the retired employees' interests. If the committee does not agree with the changes, Delta can only make the changes if the bankruptcy court finds that (1) the committee rejected the proposal "without good cause," (2) the changes are "necessary to permit the reorganization" of Delta, (3) the changes assure "that all creditors…and all of the affected parties are treated equitably," and (4) making the proposed changes to benefits "is clearly favored by the balance of the equities."
Q: Then why doesn't Delta just terminate all health benefits before any bankruptcy?
A: That is a concern, but Congress also made that alternative very expensive. For example, if health benefit plans are terminated during a bankruptcy or within one year before a bankruptcy, affected retirees may apply for permanent health coverage from Delta's group plan under COBRA. This would be very expensive for Delta, because even though Delta could charge the retirees for their share of premiums, in practice the people who elect continuing permanent COBRA coverage are usually the most high-medical needs retirees, who have difficulty getting affordable coverage elsewhere. This, in turn, would increase Delta's overall plan costs.
Q: Why the need to get lawyers now? Can't we just wait to see if Delta files bankruptcy, and if attorneys are needed then?
A: Some parts of the bankruptcy process move very quickly. For example, a motion to modify health benefits in a bankruptcy could be filed with only ten days notice. In many cases, certain matters related to a bankruptcy must be researched well ahead of any filing so that timely, effective responses can be made. As a practical matter, we must be prepared in advance of any potential filing.
End of section
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Q: I am the widow of a deceased employee and receive a retirement check each month. Is it true that if I remarry that I will lose my pass privileges?
A: Yes. Delta Standard Practice clearly states that only unremarried spouses of deceased employees are eligible for passes. As long as you do not remarry, you may change your travel companion designation under the same rules as an employee may.
(And when a retired employee remarries, his or her spouse is eligible for passes only until the employee's death.)
Q: Regarding the pilots pension retirement fund, ALPA and Delta figures on the funding status don't seem to agree. Why?
A: Walter Brill, Delta legal, answers:
- Delta's annual report (Form 5500) on the funding of its pension plans is first made public when it is filed with the Department of Labor on April 15 for the plan year ended as of the previous June 30.
- Summary Annual Reports are mailed to each participant by June 15 for the plan year ended as of the previous June 30.
- The Department of Labor is supposed to make the Form 5500 Annual Report available electronically on its website. However, they apparently have not yet done so for this year's report.
- The attachment describes the financial differences between ERISA reporting (Form 5500) and GAAP Accounting (Form 10-K).
Click here for the attachment
Q: Thanks for your recent mail. My question to you is can this REALLY WORK regarding Chapter 11 and our pension?
A: If Delta determines it is necessary to file Chapter 11, we will have to retain a lawyer triggering a much larger contribution from the participants of DALRC. As I am sure you are aware, retaining lawyers to represent Delta active and retired employees will be expensive. It is extremely important to have a seat at the table for the discussions that would take place regarding Delta's pension and benefits issues.
Unfortunately, most people do not realize that at other companies, and airlines in particular, this would be the role of their unions. Since we do not have unions representing the majority of employees and retirees at Delta, there would be no one but Delta to represent thousands of people in determining the fate of our pension plan and other benefit issues. We are not and do not intend to imply that we are in anyway associated with a union. Our sole purpose is to be the voice of employees and retirees regarding benefits issues that have been earned through service to Delta.
The most important thing we can do at this time is to increase our participant base. The more people we have supporting this organization, the larger our voice and the smaller the burden of expense on each individual. If you have any suggestions for increasing our enrollment please let us know.
Please spread the word……
Q: I sent you a check months ago, and it has not cleared my bank. What's the deal?
A: On February 11, 2004, a couple of dozen checks were mailed in a DECU self-addressed envelope for deposit. The entire deposit was lost, either by the post office or by the DECU. All of the checks were endorsed for deposit only to the DALRC account. Since so much time has passed, it is reasonable to assume that the checks are lost for good. We sure would appreciate your sending another check with a note that it is to replace a check which has not cleared.
Our treasurer had mailed many deposits before and since with no problem, so this seems to be an isolated incident. We apologize for any inconvenience to you.
Q: I already sent in $10/$20/$50. Do I need to send a check again or yearly?
A: While we would not turn your money down. we are not asking for additional funds from previous donors at this time. If it becomes necessary down the road to retain counsel we will let everyone know.
The original donation request was primarily to cover the cost of incorporation (we are a 501(c)(3) pending corporation), and for website hosting. Website costs have been minimal as all labor for setup and maintenance has been donated. If you are interested in donating your time and skills to maintaining the website, please go to feedback and send us your contact information.
Q: Can/will you include a listing of DALRC members on the web site?
A: Because of privacy concerns, we will not list members on a public web site.
