PRECEDENTIAL

  UNITED STATES COURT OF APPEALS FOR THE
THIRD CIRCUIT
                _____________

                     No. 10-1944
                    _____________

      IN RE VISTEON CORPORATION, ET AL.


   IUE-CWA, THE INDUSTRIAL DIVISION OF THE
 COMMUNICATIONS WORKERS OF AMERICA, AFL-
                   CIO, CLC,

                                 Appellant,

                            v.

VISTEON CORPORATION, DEBTORS AND DEBTORS
IN POSSESSION; and THE OFFICIAL COMMITTEE OF
      UNSECURED CREDITORS OF VISTEON
                CORPORATION,

                                 Appellees.

     On Appeal from the United States District Court
                for the District of Delaware
                      No. 10-cv-00091
   District Judge: Judge Michael M. Baylson (Specially

                           1
                          Presiding)

                    Argued May 28, 2010

     Before: McKEE, Chief Judge, and RENDELL and
              STAPLETON, Circuit Judges.

                (Opinion filed July 13, 2010)


Thomas M. Kennedy, Esq. (Argued)
Susan M. Jennick, Esq.
Kennedy, Jennik & Murray
113 University Place
7th Floor
New York, NY 10003
Attorney for Plaintiff -Appellant

Susan E.Kaufman, Esq.
Heiman, Gouge & Kaufman
800 King Street, Suite 303
Wilmington, DE 19801
Attorney for Plaintiff-Appellant

Steven D. McCormick, Esq. (Argued)
Andrew B. Bloomer, Esq.
Patrick M. Bryan, Esq.
Kirkland & Ellis
300 North LaSalle Street
Suite 2400
Chicago, IL 60654

                               2
Laura D. Jones. Esq.
James E. O’Neill, III, Esq.
Pachulski Stank Ziehl & Jones
919 North Market Street
P.O. Box 8705, 17th Floor
Wilmington, DE 19801
Attorneys for Appellee Visteon Corporation

Robert J. Stark, Esq. (Argued)
Howard L. Siegel, Esq.
Brown Rudnick
7 Times Square
47th Floor
New York, NY 10036

William P. Bowden, Esq.
Gregory A. Taylor, Esq.
Ashby & Geddes
500 Delaware Avenue
P.O. Box 1150, 8th Floor
Wilmington, DE 19899
Attorneys Appellee Official Committee of Unsecured
Creditors

                         OPINION

McKEE, Chief Judge.

      The Industrial Division of the Communications Workers

of America (“IUE-CWA” or “the union”), as the representative

                             3
of approximately 2,100 retirees from Visteon Corporation’s

manufacturing plants in Connersville and Bedford, Indiana,

appeals the district court’s order, affirming the bankruptcy

court’s order permitting Visteon to terminate retiree health and

life insurance benefits without complying with the procedures

set forth in 11 U.S.C. § 1114. Both courts reasoned that,

notwithstanding the language of that statute, it would be

unreasonable to interpret § 1114 as limiting an employer’s right

to modify or terminate benefits during the pendency of a

Chapter 11 bankruptcy proceeding, if the employer could

unilaterally terminate those benefits outside of bankruptcy

pursuant to a reservation of rights clause in the benefit plan.

Since Visteon reserved the right to unilaterally terminate the

retiree benefits at issue here, the courts concluded that Congress

did not intend § 1114 to limit that right.

       On appeal, the union argues that the plain language and

                                4
legislative history of § 1114 compel exactly the result the

district and bankruptcy courts avoided. The union claims that

Congress intended to restrict a debtor’s ability to modify or

terminate, except through the § 1114 process, any retiree

benefits during a Chapter 11 bankruptcy proceeding, regardless

of whether the debtor could terminate those benefits outside of

bankruptcy. Based on the plain language of § 1114 (as well as

its legislative history), we agree. Accordingly, as explained

more fully below, we will reverse the order of the district court

and remand for further proceedings.1

             I. Factual and Procedural History


       1
         The union also argues that the bankruptcy court erred in
finding that Visteon has the right to unilaterally terminate these
benefits under the relevant plan documents and collective
bargaining agreements. Because we conclude that § 1114 applies
regardless of whether Visteon has such a right outside of
bankruptcy, we need not reach this question. For the purposes of
our opinion, we assume, arguendo, that Visteon could unilaterally
terminate these benefits if it were not in a Chapter 11 bankruptcy
proceeding.

                                 5
      Visteon Corporation is one of the world’s largest

suppliers of automotive parts. Originally formed as a division

of Ford Motor Corporation, it spun off in 2000 to become its

own corporate entity. In doing so, it took over operation of

plants in Connersville and Bedford, Indiana previously run by

Ford or its wholly-owned subsidiaries. See J.A. 3848. Hourly

workers at both plants were represented by the IUE-CWA. See

J.A. 2218-326, 3242-392.

      For decades, Visteon, or its predecessors-in-interest, have

provided certain health and life insurance benefits to retirees

from these plants.    See, e.g, J.A. 504, 1163.       Visteon’s

agreement to provide such benefits has been memorialized in

successive collective bargaining agreements (“CBAs”), as well

as in summary plan descriptions (“SPDs”).

      The most recent SPDs at both plants state that retiree

medical coverage will “continue during retirement” or

                               6
“continue[] during retirement until . . . death.” J.A. 434, 1076.

However, both SPDs have language wherein Visteon retains its

right to modify or terminate coverage. The second page of each

SPD provides in part as follows:

              Visteon Systems, LLC intends to continue
       the Plan as described in this handbook. However,
       the Company reserves the right to suspend, amend
       or terminate the Plan – or any of the coverages or
       features provided under the Plan – at any time and
       in any ma[nn]er to the extent permitted by law
       (subject to the collective bargaining
       requirements). As a result, this handbook is not a
       contract, nor is it a guarantee of your coverages.

J.A. 417, 1060 (with slight variations). Each SPD reiterates:

       Visteon Systems, LLC intends to continue the
       Plan indefinitely.     However, the Company
       reserves the right to suspend, modify or amend
       the benefits provided under the Plan, or even
       terminate the Plan or any of the benefits provided
       under the Plan.

       However, the Plan is subject to the provisions of




                               7
       the current Collective Bargaining Agreements2
       between the Plan Sponsor and [the unions]. As a
       result, this handbook is not a guarantee of your
       coverage.

J.A. 489, 1145 (with slight variations).

Visteon closed its Connersville plant in 2007 and its Bedford

plant in 2008. Prior to each plant closing, the union and Visteon

negotiated Closing Agreements that set forth the terms under

which the plants would close. See J.A. 571-77, 1325-30. For

the most part, these agreements do not refer to retiree benefits.

However, the agreements do include a Waiver and Release,

which provides in relevant part: “Visteon may in the future

amend its benefit plans and make available different retirement,

placement or separation benefits for which I may not be eligible.

The Plant Closure Agreement does not limit or in any way


       2
         The last CBAs at each plant included commitments by
Visteon to provide retiree benefits. See J.A. 691, 1355. These
express written commitments were not continued after the plants
were closed.

                                8
modify the provisions of any benefit plan.” J.A. 575, 1328.

       On May 28, 2009, Visteon filed a petition for Chapter 11

bankruptcy in the District of Delaware. See J.A. 12. Since

filing the petition, Visteon has continued to operate its business

as a debtor in possession, and is in the process of restructuring

so that it can successfully emerge from bankruptcy. See J.A.

133.

       On June 26, 2009, Visteon moved the bankruptcy court

for permission to terminate all United States retiree benefit plans

pursuant to 11 U.S.C. § 363(b)(1).3 See J.A. 50. Visteon’s

request affected approximately 8,000 of Visteon’s present and

former employees, their spouses, and their dependants. See J.A.


       3
         Section 363(b)(1) provides that the bankruptcy trustee
“after notice and a hearing, may use, sell, or lease, other than in the
ordinary course of business, property of the estate . . . .” 11 U.S.C.
§ 363(b)(1). This provision is in contrast to transactions that are in
the ordinary course of business under subsection (c)(1) of § 363,
which do not require notice and a hearing. See 11 U.S.C. §
363(c)(1).

                                  9
106.       Several groups of retirees, including the 1,700

Connersville retirees and 400 Bedford retirees represented by

the IUE-CWA, objected. See J.A. 111-14, 3572. They argued

that Visteon could not terminate any retiree benefits during a

Chapter 11 proceeding without first complying with the

requirements of § 1114. See J.A. 350.

       On December 10, 2009, the bankruptcy court granted

Visteon’s motion as to the vast majority of the retiree benefits,

including those at issue in this appeal.4 See J.A. 3571. The

court concluded that since Visteon has the right under non-

bankruptcy law to terminate benefits unilaterally, § 1114 did not

apply. See 

explained:



       4
         The bankruptcy court granted Visteon’s motion to
terminate all retiree benefits, except for those promised or
provided to present and former employees at Visteon’s North Penn
plant, pursuant to a CBA that had not yet expired. See J.A. 3581-
82. The court made clear, however, that once the CBA did expire,
Visteon could terminate those benefits as well. See J.A. 3582.

                               10
      [The] Court finds that as a matter of applicable
      non-bankruptcy law, as well as the plain meaning
      of the controlling documents, the Debtors would
      have outside of bankruptcy the right to terminate
      these plans at will . . . .

      . . . The reason that the benefits can be terminable
      . . . is that they are not vested. In making my
      ruling, I incorporate in toto Judge Drain’s analysis
      in [In re Delphi Corp., No. 05-44481, 

(Bankr. S.D.N.Y. Mar. 10, 2009)], and I
      rely on that analysis as a support for my ruling. .
      . . I hold that the plain meaning [analysis] as
      applied by Judge Venter[] in [In re Farmland
      Indus., Inc., 

(Bankr. W.D. Mo.
      2003),] . . . is not persuasive . . . [because it]
      would lead to an absurd result in that it would
      expand retiree rights beyond the scope of state
      law for no legitimate bankruptcy purpose. Under
      [Butner v. United States, 

, 54 (1979)],
      which is based on constitutional principles, the
      statute cannot modify existing state law [absent]
      some specific bankruptcy reason and there is none
      here in connection with the issue of non-vested
      retiree benefits.

J.A. 3573-74.    The bankruptcy court therefore evaluated

Visteon’s motion to terminate retiree benefits under § 363, and

authorized the termination based on the court’s conclusion that

                              11
it was a reasonable exercise of business judgment. See J.A.

3571, 3581.

       Even though Visteon could terminate its benefit

payments immediately pursuant to the bankruptcy court’s order,

it remained obligated under the Consolidated Omnibus Budget

Reconciliation Act of 1985 (“COBRA”), 29 U.S.C. §§ 1161-68,

to provide lifetime COBRA coverage to retirees whose benefits

it discontinued during a Chapter 11 proceeding.         Visteon

consulted with its benefit administrators and determined that it

would take several months to terminate the old plans and set up

new COBRA plans. See J.A. 3688-92, 3844-45. Visteon

therefore planned to delay termination of payments for retiree

benefits until April 1, 2010. See J.A. 3844-45. After that date,

retirees could continue their Visteon health coverage only by

electing COBRA coverage, and paying the full cost of that

coverage plus a two percent administrative fee. See, e.g., J.A.

                              12
3593.

        On February 26, 2010, the union moved the bankruptcy

court for a stay pending appeal of its order permitting the

termination of benefits. See J.A. 3790-802. The bankruptcy

court denied the motion. See J.A. 3829-34. Despite finding that

some Medicare-ineligible retirees faced irreparable harm,5 it

concluded that the union was unlikely to succeed on the merits

on appeal, and therefore it could not meet the burden for

obtaining preliminary injunctive relief. See 

the bankruptcy court’s decision to the

district court, and also moved that court for a stay of the

bankruptcy court’s order. The district court denied the appeal,

and refused to issue a stay pending appeal. See J.A. 3.1. The

district court concluded that the bankruptcy court’s finding that

        5
       As of August 2009, approximately forty percent of the
Connersville and Bedford retirees were not yet eligible for
Medicare. See J.A. 3690.

                               13
the benefits were not vested was not clearly erroneous. See J.A.

3.3. It also agreed with the bankruptcy court’s conclusion that

the protections afforded by § 1114 did not apply to retiree

benefits that could be unilaterally terminated outside of

bankruptcy. Although the court acknowledged that the union’s

argument to the contrary might “seem legitimate based on a

plain reading of the statute,” it nonetheless reasoned that such an

interpretation would result in retirees receiving “more protection

from a company under bankruptcy than they would receive from

a company outside of bankruptcy . . . a unique if not

revolutionary interpretation of the Bankruptcy Code by

improving on the pre-petition, contractual rights of a third party

constituent as a result of the filing of a bankruptcy case.” J.A.

3.6.

       The district court did, however, grant a limited one-

month stay so that the union could seek expedited appeal. The

                                14
court acknowledged that the union’s legal argument had some

merit, as “neither the Supreme Court nor any circuit court has

ruled on this issue,” and its contrary reading of § 1114 was

supported only by “the interpretation of § 1114 by several

respected Bankruptcy Judges.” J.A. 3.6-3.7. It also noted that

“a strict application of the ‘plain meaning’ doctrine may warrant

a fresh reading of this statute,” but that “such an interpretation

would still have to get over the hurdle that interpreting the

statute [in that manner] results in the retirees getting more

protection through a bankruptcy proceeding than they would

absent bankruptcy.” J.A. 3.7; see also J.A. 3932-34.

       During the one-month stay granted by the district court,

Visteon was permitted to provide insurance solely through

COBRA plans.6 However, it was required to pay the April 2010

       6
         A Visteon benefits administrator submitted a declaration
to the bankruptcy court explaining that a stay which required
Visteon to provide insurance through its original benefit plans,

                                15
premiums of any Medicare-ineligible retirees who purchased

insurance. See J.A. 1-3. This expedited appeal followed.7

       Effective May 1, 2010, Visteon stopped all payments for

the retiree benefits at issue in this case, and the retirees were

able to continue Visteon health insurance only through paying

for COBRA coverage. The union represented at oral argument

that the majority of the approximately 840 Medicare-ineligible

retirees are now without health insurance, as the cost of

purchasing coverage through COBRA or other private insurance

providers is prohibitive.8


rather than through the COBRA plans it was poised to put into
effect, could not be effectuated by the health insurance companies
for approximately three months, and during that time, no one,
including those retirees who had elected COBRA coverage, would
be covered. See J.A. 3688-95.
       7
         On April 13, 2010, we granted the union’s motion to
expedite the appeal, but denied the motion to continue the stay.
The stay granted by the district court expired April 30, 2010.
       8
        The cost of COBRA coverage for those retirees who
submitted declarations to the bankruptcy court ranges from

                                16
          II. Jurisdiction and Standard of Review

       The bankruptcy court had jurisdiction pursuant to 28

U.S.C. §§ 157 and 1334. The district court had jurisdiction

pursuant to 28 U.S.C. §§ 158(a) and 1334. We have jurisdiction

pursuant to 28 U.S.C. § 158(d).

       Our review of the district court’s decision “effectively

amounts to review of the bankruptcy court’s opinion in the first

instance.” In re Sharon Steel Corp., 

, 1222 (3d

Cir. 1989). We review the bankruptcy court’s legal conclusions

de novo. See Ferrara & Hantman v. Alvarez (In re Engel), 

, 571 (3d Cir. 1997).

III. Chapter 11 Bankruptcy and the Protections of § 1114



$670.85 to $2,012.54 a month, constituting twenty-three to eighty-
six percent of the retirees’ monthly incomes. See J.A. 3656-87.
Many of these retirees and their family members suffer from
extremely serious medical conditions, including cancer, diabetes,
heart disease, muscular dystrophy, fibromyalgia, chronic
obstructive pulmonary disease, and schizophrenia. See 

a general rule, “Chapter 11 of the Bankruptcy Code

strikes a balance between two principal interests: facilitating the

reorganization and rehabilitation of the debtor as an

economically viable entity, and protecting creditors’ interests by

maximizing the value of the bankruptcy estate.”             In re

Philadelphia Newspapers, LLC, 

, 303 (3d Cir.

2010). Section 1114, however, factors another interest into the

balancing equation. As we have explained, § 1114 “was enacted

to protect the interests of retirees of chapter 11 debtors.” Gen.

DataComm Indus., Inc. v. Arcara (In re Gen. DataComm Indus.,

Inc.), 

, 620 (3d Cir. 2005) (quoting 7 Collier on

Bankruptcy, ¶ 1114.02[1] (Alan N. Resnick & Henry J. Sommer

eds., 15th ed. 2002)).

       Section 1114 was enacted, along with its counterpart §

1129(a)(13), as the primary substantive components of the

Retiree Benefits Bankruptcy Protection Act of 1988

                                18
(“RBBPA”), Pub. L. No. 100-334, 102 Stat. 610 (1988)

(codified as amended at 11 U.S.C. §§ 1114, 1129(a)(13)).

Congress enacted the RBBPA in response to LTV Corporation’s

termination of the health and life insurance benefits of 78,000

retirees during its 1986 Chapter 11 bankruptcy, with no advance

notice to the affected retirees.9 See S. Rep. No. 100-119 (1987),

reprinted in 1988 U.S.C.C.A.N. 683, 683 (“The bill . . .


       9
          Congress enacted and twice renewed stop-gap legislation
to ensure that LTV continued to pay its retiree benefits while
Congress debated the problem. See Pub. L. No. 99-591 tit. VI §
608(a) (“Notwithstanding any provision of chapter 11 of title 11,
United States Code, the trustee shall pay benefits until May 15,
1987 to retired former employees under a plan, fund, or program
maintained or established by the debtor prior to filing a petition
(through the purchase of insurance or otherwise) for the purpose of
providing medical, surgical, or hospital care benefits, or benefits in
the event of sickness, accident, disability, or death.”); Pub. L. No.
100-41 (extending requirement to pay benefits to September 15,
1987); Pub. L. No. 100-99 (extending requirement to pay benefits
to October 15, 1987). Finally, in 1988, it enacted the RBBPA,
which itself contained an interim measure extending the stop-gap
protections to certain cases already proceeding in bankruptcy. The
rest of the RBBPA, codified at 11 U.S.C. § 1114 and 11 U.S.C. §
1129(a)(13), applies to bankruptcy proceedings commenced after
its enactment.

                                 19
addresses situations with respect to retiree insurance benefits,

such as occurred last year when LTV Corporation, after filing a

Chapter 11 Bankruptcy petition, immediately terminated the

health and life insurance benefits of approximately 78,000

retirees.”).

       In crafting § 1114, Congress provided certain procedural

and substantive protections for retiree benefits during a Chapter

11 proceeding. Section 1129(a)(13) ensures that some measure

of those protections extends beyond the proceeding. For the

purposes of both sections, “retiree benefits” are defined as:

       payments to any entity or person for the purpose
       of providing or reimbursing payments for retired
       employees and their spouses and dependants, for
       medical, surgical, or hospital care benefits, or
       benefits in the event of sickness, accident,
       disability, or death under any plan, fund, or
       program (through the purchase of insurance or
       otherwise) maintained or established in whole or
       in part by the debtor prior to filing a petition
       commencing a case under this title.



                               20
11 U.S.C. § 1114(a).

       Section 1114(e) provides in relevant part that:

“[n]otwithstanding any other provision of this title, the

[trustee10] shall timely pay and shall not modify any retiree

benefits” unless the court, on the motion of the trustee or

authorized representative of the retirees,11 orders, or the trustee

and the authorized representative agree to, the modification of

such benefits. 11 U.S.C. § 1114(e).


       10
          A trustee is defined for the purposes of § 1114 to include
a debtor in possession, and therefore includes Visteon here. See 11
U.S.C. § 1114(e)(1).
       11
          “A labor organization shall be . . . the authorized
representative of those persons receiving any retiree benefits
covered by any collective bargaining agreement to which that
labor organization is a signatory,” unless the labor organization
declines to serve that role, or the court “determines that different
representation of such persons is appropriate.” 11 U.S.C. §
1114(c)(1). “[A] committee of retired employees . . . [shall] serve
as the authorized representative . . . of those persons receiving any
retiree benefits not covered by a collective bargaining agreement”
if the debtor seeks “to modify or not pay the retiree benefits or if
the court otherwise determines that it is appropriate.” 11 U.S.C. §
1114(d).

                                 21
       The trustee must attempt to reach an agreement with the

retirees regarding modification of retiree benefits before it can

ask the bankruptcy court to modify or terminate them.12 Section

1114(f) requires that the trustee “make a proposal to the

authorized representative of the retirees . . . which provides for

those necessary modifications in the retiree benefits that are

necessary to permit the reorganization of the debtor and assures

that all creditors, the debtor and all of the affected parties are

treated fairly and equitably.” 11 U.S.C. § 1114(f)(1)(A). The

trustee must also provide the authorized representative with

information about the company’s financial situation to allow for

informed evaluation of the proposal.          See 11 U.S.C. §

1114(f)(1)(B). After making this proposal, the trustee must



       12
          During these negotiations, however, the court may grant
interim modifications in retiree benefits “if essential to the
continuation of the debtor’s business, or in order to avoid
irreparable damage to the estate.” 11 U.S.C. § 1114(h)(1).

                                22
meet with the authorized representative to “confer in good faith

in attempting to reach mutually satisfactory modifications of

such retiree benefits.” 11 U.S.C. § 1114(f)(2).

       The court will grant a motion to modify retiree benefits

only if it finds that the trustee has made a proposal satisfying

these requirements, the authorized representative has refused to

accept it without “good cause,” and the “modification is

necessary to permit the reorganization of the debtor and assures

that all creditors, the debtor, and all of the affected parties are

treated fairly and equitably, and is clearly favored by the balance

of the equities.”13 11 U.S.C. § 1114(g). Even after the court


       13
           Upon the filing of a motion for the modification of
benefits, the court must, with certain limited exceptions, hold a
hearing within fourteen days. 11 U.S.C. § 1114(k)(1). The court
must rule on the motion, again with certain exceptions, within
ninety days of the commencement of the hearing. 11 U.S.C. §
1114(k)(2). “If the court does not rule on such application within
ninety days after the date of the commencement of the hearing, or
within such additional time as the trustee and the authorized
representative may agree to, the trustee may implement the

                                23
permits a modification, however, the authorized representative

may still move for an increase in benefits, which the court

should grant if consistent with the § 1114(g) standard. See 

provides additional protection for retiree

benefits by giving them priority they would not otherwise have.

That provision states: “[a]ny payment for retiree benefits

required to be made” during a Chapter 11 proceeding “has the

status of an allowed administrative expense” under 11 U.S.C. §

503, rather than the general unsecured status that would

otherwise apply. 11 U.S.C. § 1114(e)(2). Benefits paid during

the proceeding do not reduce the retirees’ general unsecured

claim “for any benefits which remain unpaid . . . [whether]

based upon . . . a right to future unpaid benefits or from any

benefits not paid as a result of modifications allowed pursuant



proposed modifications pending the ruling of the court on such
application.” 

this section.” 11 U.S.C. § 1114(i).

        Congress focused the protections of § 1114 on retirees

who would otherwise be without needed benefits.            Thus,

Congress specified that § 1114 does not apply to “any retiree, or

the spouse or dependents of such retiree, if such retiree’s gross

income for the twelve months preceding the filing of the

bankruptcy petition equals or exceeds $250,000,” unless that

retiree is able to show that s/he cannot otherwise obtain

comparable coverage. 11 U.S.C. § 1114(m).

        As already noted, the RBBPA also amended § 1129(a),

the section of Chapter 11 which sets forth the requirements a

reorganization plan must satisfy in order for the bankruptcy

court to approve the reorganization and allow the debtor to

emerge from bankruptcy. The RBBPA added the requirement

that:

        The plan provides for the continuation after its

                               25
      effective date of payment of all retiree benefits, as
      that term is defined in section 1114 of this title, at
      the level established pursuant to subsection
      (e)(1)(B) or (g) of section 1114 of this title, at any
      time prior to confirmation of the plan, for the
      duration of the period the debtor has obligated
      itself to provide such benefits.
11 U.S.C. § 1129(a)(13).

                         IV. Discussion

       As explained at the outset, this appeal requires that we

decide whether § 1114 limits a debtor’s ability to terminate

during bankruptcy those retiree benefits that it could, consistent

with plan documents, collective bargaining obligations, and the

prescriptions of the Employee Retirement Income Security Act

of 1974 (“ERISA”), 29 U.S.C. §§ 1001-461, terminate

unilaterally outside of bankruptcy.14 The union argues that the


       14
           As we will discuss in further detail below, ERISA does
not require vesting of welfare benefits, such as retiree health and
life insurance, and an employer is generally free to unilaterally
terminate them at any time and for any (or no) reason, unless it
contracts away that right. See, e.g., In re Lucent Death Benefits
ERISA Litig., 

, 256 (3d Cir. 2008). Accordingly,

                                 26
plain language of § 1114 applies to all retiree benefits, whether

or not the debtor could terminate those benefits outside of

bankruptcy pursuant to language in the applicable plan

documents reserving that right. Appellees Visteon and the

Official Committee of Unsecured Creditors (“Unsecured

Creditors”) counter by relying primarily on the majority view of

courts that have addressed this issue. Like the courts in those

cases, Appellees contend that restricting a debtor from

terminating during bankruptcy those retiree benefits that it could

otherwise terminate at will is absurd, and courts must conclude

that the plain language of a statute does not reflect congressional



outside of the bankruptcy context, there are only two
circumstances in which an employer cannot unilaterally terminate
benefits: first, if the employer has promised to continue providing
the benefits for life, i.e., if the employer has agreed that the
benefits will vest; or, second, even if the benefits are not vested, if
there is a current CBA or other employment agreement in place,
requiring payment of those benefits during the life of that
agreement.

                                  27
intent if it produces an absurd result.

       We hold that § 1114 is unambiguous and clearly applies

to any and all retiree benefits, including the ones at issue here.

Moreover, despite arguments to the contrary, the plain language

of § 1114 produces a result which is neither at odds with

legislative intent, nor absurd. Accordingly, disregarding the

text of that statute is tantamount to a judicial repeal of the very

protections Congress intended to afford in these circumstances.

We must, therefore, give effect to the statute as written. See

Lamie v. United States Tr., 

, 534 (2004) (“[W]hen

the statute’s language is plain, the sole function of the courts –

at least where the disposition required by the test is not absurd

– is to enforce it according to its terms.”) (internal quotation

marks omitted).

       We recognize that the majority of bankruptcy and district

courts that have addressed this issue have concluded that § 1114

                                28
does not limit a debtor’s ability to terminate benefits during

bankruptcy when it has reserved the right to do so in the

applicable plan documents.      See, e.g., Retired W. Union

Employees Ass’n v. New Valley Corp. (In re New Valley Corp.),

No. 92-4884, 

(D. N.J. Jan. 28, 1993); In re

Delphi Corp., No. 05-44481, 

(Bankr.

S.D.N.Y. Mar. 10, 2009); In re N. Am. Royalties, Inc., 

(Bankr. E.D. Tenn. 2002); In re Doskocil Cos., 

(Bankr. D. Kan. 1991). But see Retailers Serv. Corp. v.

Employees’ Comm. of Ames Dep’t Store, Inc. (In re Ames Dep’t

Stores, Inc.), Nos. 92 Civ. 6145-46, 

(S.D.N.Y.

Nov. 30, 1992); In re Farmland Indus., Inc., 

(Bankr. W.D. Mo. 2003).

       We also realize that our conclusion appears to be in

tension with the decision of the Court of Appeals for the Second

Circuit in LTV Steel Co. v. United Mine Workers (In re

                              29
Chateaugay Corp.), 

(2d Cir. 1991). There, the

court was confronted with the related, but different, issue of §

1114’s applicability to benefits provided pursuant to a CBA that

expires while the debtor is in Chapter 11 proceedings.

       We are convinced that in reaching these contrary

conclusions as to the scope of § 1114, these courts mistakenly

relied on their own views about sensible policy, rather than on

the congressional policy choice reflected in the unambiguous

language of the statute.

                     A. Plain Language

       As in all cases of statutory construction, our analysis of

§ 1114 begins with the statute’s plain language. See, e.g.,

Hourly Employees/Retirees of Debtor v. Erie Forge & Steel, Inc.

(In re Erie Forge & Steel), 

, 276 (3d Cir. 2005)

(construing “authorized representative” provision of § 1114 in

accordance with its plain language). The words of a statute are

                               30
not to be lightly jettisoned by courts looking to impose their own

logic on a statutory scheme. See United States v. Terlingo, 

, 221 (3d Cir. 2003) (Courts may look behind a statute

only when the plain meaning produces “a result that is not just

unwise but is clearly absurd.”) (internal quotation marks

omitted). When statutory language is plain and unambiguous,

“the sole function of the courts . . . is to enforce it according to

its terms.” 

(internal quotation marks

omitted). “[C]ourts must presume that a legislature says in a

statute what it means and means in a statute what it says there.”

Conn. Nat’l Bank v. Germain, 

, 253-54 (1992). It

is for Congress, not the courts, to enact legislation. When courts

disregard the language Congress has used in an unambiguous

statute, they amend or repeal that which Congress enacted into

law. Such a failure to defer to the clearly expressed statutory

language of Congress runs contrary to the bedrock principles of

                                31
our democratic society. See 

(“Our

unwillingness to soften the import of Congress’ chosen words

. . . results from ‘deference to the supremacy of the

Legislature.’”) (quoting United States v. Locke, 

, 95

(1985)).

       As discussed above, § 1114(e)(1) plainly states:

“[n]otwithstanding any other provision of this title, the [trustee]

shall timely pay and shall not modify any retiree benefits,”

except through compliance with the procedures set forth therein.

11 U.S.C. § 1114(e)(1) (emphasis added). “Retiree benefits” are

defined, in turn, as “payments to any entity or person for [certain

select purposes] under any plan, fund, or program . . .

maintained or established in whole or in part by the debtor prior

to filing a petition commencing a case under this title.” 11

U.S.C. § 1114(a) (emphasis added). With the exception of

subsection (m), which specifies that § 1114 does not apply to

                                32
high-income retirees able to obtain comparable benefits, § 1114

contains no limitation or restriction.

       Section 1114 could hardly be clearer. It restricts a

debtor’s ability to modify any payments to any entity or person

under any plan, fund, or program in existence when the debtor

files for Chapter 11 bankruptcy, and it does so notwithstanding

any other provision of the bankruptcy code. There is therefore

no ambiguity as to whether § 1114 applies here. Congress did

not restrict the application of § 1114 to those benefits that the

debtor was otherwise compelled to provide. Benefits that the

debtor could have terminated outside of bankruptcy, but which

it was nonetheless providing at the time of its Chapter 11 filing,

are plainly included in the phrase, “payments to any entity or

person . . . under any plan, fund, or program.”

       Congress took care to specifically exclude some benefits

from the protective umbrella of § 1114.           The protections

                               33
established therein do not extend to benefits provided for

purposes other than health, accident, disability, or death; or to

benefits provided to high-income retirees able to obtain

comparable coverage; or to benefits contemplated, but not

maintained or established, prior to the debtor’s filing for

bankruptcy.     However, Congress did not limit § 1114’s

otherwise broad scope based on whether or not the debtor

reserved a right to terminate in its plan. See In re Farmland

Indus., 

(“On its face, the language of

the statute is clear. . . . There is nothing in the language of the

statute to suggest that Congress intended to allow the

termination of retiree benefits in those instances where the

debtor has the right to unilaterally terminate those benefits under

the language of the plan or program at issue.”).

       Nevertheless, the Unsecured Creditors argue that § 1114

is ambiguous because it does not specifically address whether

                                34
benefits which could be unilaterally terminated outside of

bankruptcy are “retiree benefits.” However, that is not an

ambiguity. Language is ambiguous only if it is “reasonably

susceptible of different interpretations.” Dobrek v. Phelan, 

, 264 (3d Cir. 2005) (internal quotation marks omitted).

It is impossible to read the plain language of § 1114 as

excluding benefits which are terminable outside of bankruptcy

because, as we have explained, they are plainly “payments to

any entity or person . . . under any plan, fund, or program.”

       Furthermore, a statute is not ambiguous simply because

it is broad.   “In employing intentionally broad language,

Congress avoids the necessity of spelling out in advance every

contingency to which a statute could apply.” In re Philadelphia

. By using the word “any” three

separate times, Congress ensured that the statute would apply to

all benefits, absent the few exceptions directly addressed,

                               35
without its having to itemize that entire universe of benefits.

We are, therefore, unpersuaded by the suggestion that failure to

specifically address benefits that could be unilaterally

terminated outside of bankruptcy somehow breathes ambiguity

into the word “any.” The breadth of the statute’s language

requires that it be universally applied absent the few exceptions

included in the text; it does not create a license to disregard the

statute’s plain language.

       Visteon relies upon In re Chateaugay Corp. in arguing

that the phrase “under any plan, fund, or program” makes §

1114 ambiguous in these circumstances, because it compels

judicial consideration of the plan under which benefits are

provided.    Otherwise, according to Visteon, it would be

impossible to determine which benefits, if any, are due. The

court in Chateaugay addressed the distinct but related issue of




                                36
whether the RBBPA’s interim measure15 required a debtor to

continue paying retiree benefits during bankruptcy even after

expiration of the applicable CBA. The court concluded that the

debtor was free to terminate benefits without complying with §

1114. It reasoned:

               The Act expressly states that the trustee in
       bankruptcy . . . must continue to “pay benefits to
       retired former employees under a plan, fund, or
       program maintained or established by the debtor
       prior to filing a petition [for bankruptcy].” Thus,
       we must analyze the “plan, fund, or program
       maintained or established” by LTV before it filed

       15
           As discussed above, supra note 9, because those portions
of the RBBPA codified at § 1114 and § 1129(a)(13) were
applicable only to bankruptcy proceedings initiated after the
statute’s enactment, the RBBPA also included an interim measure
extending previously enacted stop-gap protections to ongoing
bankruptcy proceedings. We note that although the protections
provided by the interim measure were similar to those now
provided by § 1114, its plain language was less adamant. The
interim measure provided: “the trustee shall pay benefits to retired
former employees under a plan, fund, or program maintained or
established by the debtor prior to filing a petition” during the
bankruptcy proceeding and until a plan is confirmed, unless
modification is agreed to by the parties or ordered by the court.
Pub. L. No. 100-334, § 3 (amending Pub. L. No. 99-591).

                                 37
       for bankruptcy in order to determine the trustee’s
       obligation to LTV’s retired former 

. Since the debtor there was not obligated to

continue paying benefits upon expiration of the CBA, the court

reasoned that no further payments were necessary.

       However, as the dissent in Chateaugay pointed out, the

Second Circuit majority’s analysis failed to remain faithful to

the plain language of the provision the court was interpreting.

The majority concluded that the statute only mandated

continuation of payments the debtor was required to make under

a plan, as opposed to simply payments being made under a

plan. This is not what the statute said. Congress did not use the

word “required,” nor did it use the word “obligations.” Rather,

as we have explained, Congress mandated that the debtor

continue to pay benefits “under a plan, fund, or program

maintained or established by the debtor prior to filing a



                               38
petition.” The expiration of the agreement to provide benefits

did not alter the fact that those benefits were provided “under”

a plan that was in effect when the petition was filed.

Interpreting this language in light of the legislative history, the

Chateaugay dissent concluded that the measure required

continuation of “all retiree health benefits . . . in effect

immediately prior to bankruptcy,” including those retiree

benefits provided pursuant to a CBA that expires during the

course of the bankruptcy 

.

       To the extent that Chateaugay is relevant to our analysis,

we find Judge Restani’s cogent and well-reasoned dissent more

persuasive, and far more faithful to the statutory text than the

analysis of that court’s majority. However, the issue before the

court in Chateaugay differed from the one before us, and

whatever the merits of Visteon’s argument in that context, it




                                39
plainly fails here.16

       Given the importance of the text, it is worth reiterating

that § 1114(e)(1) requires that a trustee “shall timely pay and

shall not modify any retiree benefits.” 11 U.S.C. § 1114(e)(1).

“Retiree benefits” are defined as “payments to any entity or

person . . . under any plan, fund, or program . . . maintained or

established in whole or in part by the debtor prior to filing a

petition.”   11 U.S.C. § 1114(a).        Payments made during

bankruptcy under a plan that is terminable at will are

unambiguously “retiree benefits” under this definition. The fact

that the debtor could have unilaterally stopped the payments had



       16
           Notably, the dissent in Chateaugay interpreted the
district court as having agreed that the RBBPA’s interim measure
would apply to benefits terminable at will, even though it would
not apply to benefits under an expired CBA. 

(“The district court decided, in essence, that although the Act
applies to health benefits that are terminable at will, it does not
apply to health benefits that are provided pursuant to a contract
obligation which is interpreted to have expired.”).

                                40
it not been in Chapter 11 is therefore irrelevant. Once a

bankruptcy petition is filed, § 1114(e) takes effect, and the

trustee must “timely pay and . . . not modify any retiree

benefits” except through the § 1114 procedure.17           Benefit

payments pursuant to a terminable at will plan in effect when the

petition is filed thus continue to be for the pendency of the

proceeding “under any plan, fund, or program.”

       It is also argued that § 1114 becomes ambiguous when

read in conjunction with its counterpart § 1129(a)(13). As we

have noted, the latter provision was also enacted as part of the

RBBPA. It is a “cardinal rule” of statutory interpretation that “a



       17
          Visteon argues that the statute as construed this way is
nonsensical because it would prompt any rational soon-to-be
debtor to terminate retiree benefits on the eve of bankruptcy.
However, as we will explain, Congress anticipated that “escape
hatch” and closed it with its 2005 addition to § 1114 of subsection
(l). That subsection prohibits an insolvent debtor from terminating
retiree benefits in the six months prior to filing for bankruptcy.
See 11 U.S.C. § 1114(l).

                                41
statute is to be read as a whole.” Leckey v. Stefano, 

, 220 (3d Cir. 2007) (internal quotation marks omitted).

Reading § 1114 in conjunction with § 1129(a)(13), however,

merely reinforces our conclusion that § 1114 limits Visteon’s

ability to modify or terminate any retiree benefits.

       Section 1129(a)(13) specifies that in order to emerge

from bankruptcy, the debtor’s reorganization plan must provide

for:

       the continuation after its effective date of payment
       of all retiree benefits, as that term is defined in
       section 1114 of this title, at the level established
       pursuant to subsection (e)(1)(B) or (g) of section
       1114 of this title, at any time prior to confirmation
       of the plan, for the duration of the period the
       debtor has obligated itself to provide such
       benefits.

11 U.S.C. § 1129(a)(13). Ambiguity is purportedly ushered in

through the phrase, “for the duration of the period the debtor has

obligated itself to provide such benefits.”         As we have



                                42
explained, § 1114 contains no limitation based on the debtor’s

obligation to provide benefits, yet § 1129(a)(13) clearly does.

Courts, assuming that Congress intended the two provisions to

be identical in scope, have accordingly found ambiguity when

considering them together. In In re New Valley Corp., for

example, the court acknowledged that “the language of section

1114, particularly the phrase ‘any retiree benefits’ appears to

embrace all retiree benefit plans in its modification procedures.”

, at *4.           However, because it read §

1129(a)(13) as “appear[ing] to limit the application of section

1114 to retiree benefits which the debtor has ‘obligated itself’ to

pay, presumably pursuant to prior contractual agreement,” 

concluded that the “statutory scheme [was] not clear,”

It looked beyond the plain language of the statute to

ascertain the meaning of § 1114.

       The union advocates a quite different interpretation of §

                                43
1129(a)(13), which it contends avoids creating ambiguity in §

1114. It posits that the clause, “for the duration of the period the

debtor has obligated itself to provide such benefits,” refers

solely to those obligations that a debtor takes on during the §

1114 process, and not to any extra-bankruptcy obligations.

According to the union, § 1129(a)(13):

       does not come into play until the § 1114 process
       has been completed and a Chapter 11 debtor has
       obligated itself to continue retiree benefits for
       some period of time in the course of a § 1114
       process. Section 1129[(a)](13) merely ensures
       that retirees who exit the § 1114 process having
       secured a promise from the debtor that their
       retiree benefits will continue for a period of time
       do in fact receive the benefit of their bargain in
       the Chapter 11 Plan upon its confirmation.

Appellant’s Br. 31-32.

       Although we agree that § 1129(a)(13) does not create

ambiguity in the statutory scheme, we are not persuaded by the

union’s interpretation of the provision for two reasons. First, the



                                44
syntax of the section is inconsistent with the union’s argument

that § 1129(a)(13) obligations arise solely from § 1114. Section

1129(a)(13) requires the continuation of the payment of retiree

benefits, “at the level established [through the § 1114 process],

for the duration of the period the debtor has obligated itself to

provide such benefits.”      11 U.S.C. § 1129(a)(13).         The

continuation of payments is accordingly to be in accordance

with two separate clauses. The first, “at the level established

[through the § 1114 process]” clearly states that the level of

benefits is the level agreed upon, or ordered by the court,

pursuant to § 1114. The second, “for the duration of the period

the debtor has obligated itself to provide such benefits,” contains

no such reference to § 1114. Had Congress intended to refer to

a “duration” or “obligation” arising from the § 1114 process, it

would have said so. It would have required the continuation of

retiree benefits “at the level, and for the duration, established”

                                45
pursuant to § 1114.

       Secondly, the union’s reading is incompatible with how

§ 1114 operates in practice. Section 1114 permits modification

of retiree benefits either by agreement between the debtor and

the authorized representative, or, if agreement cannot be

reached, through court order. In those instances in which

agreement is reached, any duration agreed upon could be

described as “the duration of the period the debtor has obligated

itself to provide such benefits.” However, where the court has

ordered modification, it makes no sense to refer to the court-

ordered duration as something to which the debtor has

“obligated itself.”

       We think “the duration of the period the debtor has

obligated itself to provide such benefits” plainly encompasses

any durational obligations, including those arising outside of the

bankruptcy context. Of course, such obligations could be

                               46
modified by agreement during the § 1114 process. Cf. In re N.

Am. Royalties, 

(“Section 1129(a)(13)

requires the plan to provide for continued payment of retiree

benefits according to the pre-chapter 11 contract or the

modifications made under § 1114.”). However, the § 1114

process may not yield agreement on durational obligations,

either because no agreement is reached at all and modification

is court-ordered, or because the agreement reached addresses

only level of benefits and not duration. In such cases, the sole

source of durational obligations is the underlying contractual

agreements, and if the debtor has no obligations under those

agreements, as is the case here, § 1129(a)(13) does not require

continuation of benefit payments upon the debtor’s emergence

from bankruptcy.

       Contrary to the court’s reasoning in In re New Valley

Corp., however, we do not believe that Congress intended the

                              47
plain language of § 1129(a)(13) to limit the reach or operation

of § 1114. Rather, the difference in the plain language of these

two provisions compels the opposite conclusion.

       A “fundamental canon of statutory construction” is that

where a section of a statute does not include a specific term or

phrase used elsewhere in the statute, “the drafters did not wish

such a requirement to apply.” United States v. Mobley, 

, 452-53 (3d Cir. 1992); see also BFP v. Resolution Trust

Corp., 

, 537 (1994) (“[I]t is generally presumed

that Congress acts intentionally and purposefully when it

includes particular language in one section of a statute but omits

it in another.”) (alteration in original) (internal quotation marks

omitted). By including “for the duration of the period the debtor

has obligated itself to provide such benefits” in § 1129(a)(13),

Congress requires debtors emerging from bankruptcy to

continue to provide benefits only if they are otherwise obligated

                                48
to. So long as they do not take on new durational obligations

during the § 1114 process, debtors emerge from Chapter 11 as

free to terminate benefits as they would have been had they

never entered Chapter 11.

       In sharp contrast, § 1114 requires the continuation of all

retiree benefits without limitation to “the period the debtor has

obligated itself to provide such benefits.” We must assume that

this omission was purposeful. As Professor Susan Stabile

explains in her thorough discussion of § 1114, “when Congress

wanted to limit a company’s responsibility for retiree benefits,

it explicitly did so. . . . The omission of [§ 1129(a)(13)’s]

explicit language in section 1114’s provisions . . . indicates that

Congress did not implicitly intend to adopt the same contractual,

durational limit in that context.’” Susan Stabile, Protecting

Retiree Medical Benefits in Bankruptcy: The Scope of Section

1114 of the Bankruptcy Code, 14 Cardozo L. Rev. 1911, 1932

                                49
(1993) [hereinafter “The Scope of Section 1114”]. Therefore,

during the limited period of the bankruptcy proceeding, we

conclude that Congress intended to do exactly what it said,

require the debtor to continue and not modify any retiree

benefits, even if it would not otherwise be obligated to continue

them.18

       In interpreting this scheme, we also cannot ignore the

substantial change in debtors’ rights enacted in 2005 through the

amendment of § 1114 to include subsection (l). See Bankruptcy

Abuse Prevention and Consumer Protection Act of 2005, Pub.

L. No. 109-8, 119 Stat. 23 (2005) (codified at 11 U.S.C. §

1114(l)). Subsection (l) provides:



       18
          Moreover, as we explain below, this result is consistent
with the economic realities of bankruptcy, as well as the
circumstances and discussions that lead to enactment of the
RBBPA. Together, § 1114 and § 1129(a)(13) ensure that retiree
benefits are protected when they are most vulnerable, during the
bankruptcy proceeding itself.

                                50
       [i]f the debtor, during the 180-day period ending
       on the date of the filing of the petition – (1)
       modified retiree benefits; and (2) was insolvent on
       the date such benefits were modified; the court .
       . . shall issue an order reinstating as of the date the
       modification was made, such benefits as in effect
       immediately before such date unless the court
       finds that the balance of the equities clearly favors
       such modification.

11 U.S.C. § 1114(l).

       Subsection (l) prevents an insolvent debtor from

terminating retiree benefits in the six-month period before filing

for bankruptcy. Like the rest of § 1114, this subsection contains

no limitation based on whether the debtor has obligated itself to

continue providing these benefits. Additionally, though, §

1114(l) would be virtually meaningless if it did not apply to

those benefits the debtor could unilaterally terminate or modify.

Outside of the bankruptcy context, an employer is already

prohibited by various laws, including ERISA, the Labor-

Management Relations Act of 1947, codified in various sections

                                 51
of 29 U.S.C., and basic principles of contract law, from

modifying those benefits it is obligated to provide. Subsection

(l) therefore has meaning only if it adds something new, namely,

the protection of benefits a would-be debtor could otherwise

terminate at will.

       Subsection (l) therefore provides additional evidence of

the coherence of the statutory scheme Congress has created

here. Many of the cases relied on by Appellees to support their

contention that § 1114 cannot apply to terminable at will

benefits were decided before this 2005 amendment, and

therefore the courts issuing them did not have the benefit of this

added evidence of congressional intent. Although we think that

the language of § 1114 was always unambiguous, this

subsection certainly reinforces our view of the text. See 7

Collier on Bankruptcy ¶ 1114.03[2] (Alan N. Resnick & Henry

J. Sommer eds., 16th ed. 2009) (“[L]ending some support to [the

                               52
minority] view [that § 1114 applies to benefits which are

terminable at will], is the 2005 addition of new subsection (l) to

section 1114 limiting a company’s ability to ‘modify’ retiree

benefits during the 180-day period prior to the filing of the

bankruptcy petition.”).

        We realize, as Visteon correctly argues, that the

bankruptcy court for the Southern District of New York in In re

Delphi Corp. recently considered and rejected the argument that

the 2005 amendment of § 1114 undermines the majority view

that the provision does not apply if benefits are terminable at

will.   However, the reasoning in In re Delphi Corp. is

unpersuasive because the court’s analysis is not faithful to the

plain language rule that it purports to, and must, apply.

        Although the Delphi court stated that “[t]he starting point

for [this] analysis is the language of the statute,” the court did

not actually begin its analysis with the statutory text. In re

                                53
Delphi Corp., 

, at *2. Instead, it immediately

turned to case law and to a consideration of “fundamental

principles underlying the Bankruptcy Code.” 

those principles, it concluded that “the provision’s language

does not compel the interpretation” that § 1114 applies to those

benefits which could be terminated unilaterally outside of the

bankruptcy context. 

court addressed subsection

(l). It stated:

        Section 1114(l) . . . does not specifically deal with
        the issue of plans modifiable as of right and could
        conceivably apply to pre-bankruptcy breaches by
        debtors in financial distress of vested rights.
        More importantly, even if it does also apply to
        modifiable plans, I do not view Section 1114(l),
        which applies to a specific type of prepetition
        action, as overruling Doskocil and the line of
        cases that follow it, which apply to postpetition
        actions, nor does there appear to me to be any
        legislative history or other policy statement . . .
        that would clearly set forth Congress’ intention
        generally in Section 1114(l) to override, beyond
        its specific terms, the fundamental principle that
        bankruptcy does not give new rights to individual

                                 54
        parties in interest . . . .

6.

        This analysis exemplifies a fundamental flaw of many of

the cases which have failed to afford § 1114 its plain meaning.

Rather than beginning with the language of §§ 1114(a) or (e),

and the language of the related provisions of §§ 1114(l) or §

1129(a)(13), the Delphi court began with its own assumptions

of why § 1114 could not prohibit a debtor from doing in

bankruptcy what it could do outside of bankruptcy. It then

found statutory language, such as subsection (l), insufficiently

persuasive to alter its view of what would be an appropriate

result under Chapter 11. Statutory interpretation “should be

made of sterner stuff” than that. The language Congress chose

when crafting a statute must be considered first and foremost,

and if plain and unambiguous, it must be credited, except in

“rare and exceptional circumstances.” Rubin v. United States,

                                      55


, 430 (1981) (internal quotation marks omitted).

       Appellees argue that this is such a rare and exceptional

circumstance. “We do not look past the plain meaning unless it

produces a result demonstrably at odds with the intentions of its

drafters . . . or an outcome so bizarre that Congress could not

have intended it.” Mitchell v. Horn, 

, 535 (3d Cir.

2003) (internal quotation marks and citations omitted).

Appellees argue both legislative history and absurdity. We find

neither a convincing reason to disregard the plain language of

the statute.

                    B. Legislative History

       Appellees argue that the RBBPA’s legislative history is

inconsistent with our interpretation of § 1114. They rely on

certain legislators’ statements that § 1114 would prevent debtors

from reneging on their “promises” or their “legal and contractual

obligations.” See Visteon’s Br. 27 (listing examples of such

                               56
statements). Seizing on these snippets of legislative history,

Appellees contend that Congress did not intend § 1114 to apply

in the absence of such promises or obligations. The majority in

Chateaugay focused on these same statements to buttress their

conclusion that § 1114 did not apply following expiration of the

CBA requiring payment. See 

(“As numerous legislators noted, the Act was created to ‘insure

that promises made to employees during their working years are

not broken during their retirement years.’”) (quoting 133 Cong.

Rec. H1257 (daily ed. Mar. 11, 1987) (statement by Rep.

Frost)).

       “[O]nly the most extraordinary showing of contrary

intentions in the legislative history will justify a departure” from

the unambiguous plain language of a statute. United States v.

Albertini, 

, 680 (1985) (alteration in original)

(internal quotation marks omitted). The statements cited by

                                57
Visteon fall woefully short of such an “extraordinary showing

of contrary intentions.” 

uncontested that § 1114 applies

to benefits that a debtor is legally or contractually obligated to

provide. Therefore, it is not the least bit surprising that the

legislative history reflects concerns about a debtor’s legal and

contractual obligations. This does not advance our inquiry very

far. We must determine if § 1114 applies only to such benefits,

despite plain language to the contrary. Neither Visteon nor the

Unsecured Creditors are able to point to a single statement

anywhere in the legislative history suggesting that the

safeguards of § 1114 are triggered only in those instances where

the debtor is legally or contractually obligated to provide

benefits.19


       19
         Furthermore, when Congress enacted the RBBPA, at
least some legislators seemed to have a quite different
understanding of what a legal or contractual obligation, or
promise, to provide retiree benefits constituted than we do today.
See generally Retiree Health Benefits: The Fair-Weather Promise:

                                58
       In fact, the legislative history contains numerous

references to a much broader congressional concern. No doubt

because they were reacting to LTV’s termination of benefits,




Hearing Before the S. Spec. Comm. on Aging, 99th Cong. 2d Sess.
(1986) [hereinafter “Fair-Weather Promise”]. Then, the emergent
judicial view was that retiree benefits were presumed to vest at
retirement, unless the employer included in its SPD a clear
indication of intent not to vest those benefits. See 

Legislators expressed concern about an employer’s ability to avoid
its “promises” and “obligations” through manipulation of
contractual language. See, e.g., 

(statement of Sen. Heinz)
(“[E]mployers clever enough to place limits on their contract
promises will have no obligation to pay.”). In this context, we
think the discussions of legal and contractual obligations and
promises that Appellees point to may not have referred only to
those benefits we would now call “vested,” but likely also
encapsulated certain legislators’ opinions that an employer had an
“obligation,” once an employee retired, to continue payment of
retiree benefits, notwithstanding contractual language to the
contrary. See, e.g., 

(statement of Sen. Wilson)
(“Employers, we know, can easily place limits on the contracts;
they can release themselves from an obligation to pay. Many have,
or we would not be here today. . . . It is unfortunate that we need to
be involved, and I think Congress has a responsibility to assist in
providing some remedy for those threatened with such unremedied
breach of contract.”); see also infra Section IV.C. Furthermore,
we note that terms such as “promise” and “obligation” need not
refer only to promises and obligations enforced by law.

                                 59
legislators discussed the “legitimate expectations” of retirees,

and the necessity in a “just society” of giving effect to those

expectations whenever possible. Representative Fish stated:

“[t]hese retiree benefits, in my judgment, should receive special

Bankruptcy Code protection because a just society has an

interest in trying to effectuate the legitimate expectations of

former workers – and vulnerable retirees may suffer enormously

from benefit terminations.” 134 Cong. Rec. H3486-02 (daily ed.

May 23, 1988) (statement of Rep. Fish) (emphasis added).

Similarly, Representative Feighan said:

       Under current law, retirees of bankrupt
       corporations often find their legitimate
       expectations of long-term health and life
       insurance coverage shattered – by the very
       company for whom they worked all their lives.
       Those who build a company deserve better. They
       have earned the right to be treated fairly and
       compassionately. . . . [This bill] would clarify the
       Bankruptcy Code to end the current unfairness.

Rep. Feighan) (emphasis added).

                               60
       Moreover, we do not believe that those legislators who

spoke of “legitimate” expectations were referring only to vested

benefits or benefits provided under an unexpired CBA. As

Representative Edwards explained, Congress thought it

“imperative that [it] protect the retirees from the sudden and

unilateral termination of their health, life, and disability benefits

. . . [because] [r]etirees who have devoted their working lives to

the betterment of their employers’ businesses deserve payment

of their retiree health benefits to the fullest extent possible in a

reorganization.”20 

Rep. Edwards) (emphasis

added).


       20
           “Cherry-picking” favorable snippets of legislative history
to establish the meaning of subsequently enacted legislation is an
enterprise rife with the potential for mischief and abuse. We
emphasize that we consider these statements not to find the
meaning of § 1114 – its meaning is plain – but for the limited
purpose of evaluating whether that plain language is
“demonstrably at odds with the intentions of its drafters,” 

(internal quotation marks omitted), which it
clearly is not.

                                 61
       We also think the statements of Senator Metzenbaum, the

Senate sponsor of the RBBPA, merit serious attention. In

discussing the scope of the legislation, he described a legislative

intent directly at odds with the majority’s construction of the

statute in Chateaugay. Senator Metzenbaum explained that the

bill “requires a company to continue paying for these [retiree]

benefits even after the termination of a collective bargaining

agreement. Only if a company can prove a modification is

absolutely necessary and that it treats everyone fairly can a

court, after a hearing, order any modification.” Retiree Benefits

Security Act of 1987: Hearings on S. 548 Before the Subcomm.

on Courts and Administrative Practice of the S. Comm. on the

Judiciary, 100th Cong., 1st Sess. 14 (1987) [hereinafter “1987

Senate Hearings”] (statement of Sen. Metzenbaum) (emphasis

added).    Senator Metzenbaum also explained the policy

concerns underlying the legislation: “Bankruptcies are painful

                                62
for workers, communities, small business suppliers and others.

But the burden of turning a company around should not rest on

the backs of retirees. They deserve a fair shake from the

companies they build and from the law governing the

reorganization process.” 134 Cong. Rec. S6823-02 (daily ed.

May 26, 1988) (statement of Sen. Metzenbaum) (emphasis

added). All of these remarks speak of a far broader legislative

intent than Appellees would have us believe.21

       21
           Appellees also draw our attention to those statements in
the legislative history which refer to congressional concern with
the “unilateral” termination of retiree benefits by a debtor. They
argue that when a debtor terminates benefits pursuant to a reserved
right in the plan, this is not a “unilateral” termination of benefits,
as the retirees have in effect consented to their benefits being
terminated by agreeing to work (and retire) under these terms.
This argument originates from the district court’s analysis in
Chateaugay. That court reasoned that when a debtor terminates
benefits based on the expiration of a CBA, it does not
“unilaterally” terminate benefits. LTV Steel Co. v. Connors (In re
Chateaugay Corp.), 

, 404-05 (S.D.N.Y. 1990).
        We do not disagree that Congress evidenced a concern
about unilateral termination of benefits. However, we are not
persuaded by the linguistic contortions necessary to equate a
debtor’s unilateral invocation of a reservation of rights clause with

                                 63
       Appellees’ argument also ignores additional pieces of

legislative history that specifically address the scope of § 1114.

The Report drafted to accompany the Senate version of the bill,

a more authoritative piece of legislative history than statements

of individual legislators, explains:

       Section 1114 makes it clear that when a Chapter
       11 petition is filed retiree benefit payments must
       be continued without change until and unless a
       modification is agreed to by the parties or ordered
       by the court. Section 1114(e)(1) rejects any other
       basis for trustees to cease or modify retiree
       benefit payments.

 S. Rep. No. 100-119, 1988 U.S.C.C.A.N. at 687 (emphasis

added). That Report, like the section it references, could hardly




a bilateral termination of benefits. As Professor Stabile explains,
this line of reasoning confuses “unilateral termination of benefits”
with “a unilateral change in the obligation to provide benefits.”
Stabile, The Scope of Section 1114 at 1940-41. Even though a
debtor invoking a termination clause does not unilaterally change
its obligation to provide benefits, it most certainly unilaterally
terminates benefits, and it was the latter of these two with which
Congress was concerned.

                                 64
be more clear. Once a Chapter 11 petition is filed, there is only

one way to terminate or modify retiree benefits while the debtor

remains in Chapter 11, and that is through the procedure

established in § 1114. Again, the fact that the debtor could

terminate those same benefits outside of bankruptcy is

irrelevant. See also 134 Cong. Rec. S6823-02 (daily ed. May

26, 1988) (statement of Sen. Heflin) (“Companies cannot

unilaterally terminate benefits for retirees when the company

files Chapter 11. Rather, this bill makes it clear that when a

Chapter 11 petition is filed, retiree benefit payments must be

continued without change, until or unless a modification is

agreed to by the parties or ordered by the court.”);          

Sen. Metzenbaum) (“[T]his measure makes

absolutely clear that reorganizing companies may never

unilaterally cut off retiree insurance benefits.”).

       Our analysis of legislative history would be incomplete

                                65
without further discussion of the underlying events that moved

Congress to enact the RBBPA. See Elliot Coal Mining Co. v.

Office of Workers’ Comp. Programs, 

, 631 (3d Cir.

1994) (A court should “look to the ‘mischief and defect’ that the

statute was intended to cure.”) (quoting Heydon’s Case, 76 Eng.

Rep. 637 (Ex. 1584)).

       Here, there is no question that Congress enacted the

RBBPA to respond to the harm (and outrage) following LTV

Corporation’s termination of the benefits of 78,000 retirees

without notice during its 1986 bankruptcy. As one legislator

explained:

       [t]he vulnerability of retiree benefits was exposed
       when LTV unilaterally terminated the health and
       life insurance benefits of tens of thousands of
       retirees across the country. Public outrage
       followed causing LTV to restore the benefits, but
       the ensuing fear and mistrust made it obvious that
       a legislative response was necessary. Congress
       needed to ensure workers that a unilateral
       termination would never occur again.

                               66
134 Cong. Rec. E1672-02 (daily ed. May 24, 1988) (statement

by Rep. Oakar).

      In attempting to craft an appropriate legislative response

to LTV’s bankruptcy, Congress heard testimony about the

effect of LTV’s bankruptcy on its retirees, see generally LTV

Bankruptcy: Hearing before the S. Comm. on the Judiciary, 99th

Cong., 2d Sess. (1986) [hereinafter “LTV Bankruptcy”], as well

as about the broader causes of retiree benefit insecurity, see

generally Fair-Weather Promise. Congress was aware that

among the retirees affected by LTV’s actions “were persons

who received their insurance benefits pursuant to collective

bargaining agreements, and those who received those benefits

pursuant to non-collectively bargained plans.” S. Rep. No. 100-

119, 1988 U.S.C.C.A.N. at 683. Congress accordingly was fully

committed to ensuring that both union and non-union employees

would be equally protected by the RBBPA. See, e.g., 134 Cong.

                              67
Rec. 12,698 (statement of Sen. Metzenbaum) (“The provisions

of [the RBBPA] apply to union and nonunion retirees.”); LTV

Bankruptcy at 52 (statement of Sen. Metzenbaum) (“[W]e will

make every effort at the legislative level to protect the rights of

the salaried employees just as we will make an effort to protect

the rights of the employees who have the collective bargaining

agreement.”). Importantly, Congress also heard testimony that

since retiree benefits were increasingly “unvested,” see Fair-

Weather Promise at 24, 43, 78, soon the only benefits employers

would not be able to unilaterally terminate outside of bankruptcy

were those covered by a current contractual agreement, such as

a CBA, 

Congress was therefore aware that debtors

would almost always have an extra-bankruptcy right to

unilaterally terminate the benefits of non-union employees.

       If we were to credit Appellees’ interpretation of § 1114

and remove from its protections those benefits that could be

                                68
unilaterally terminated outside of bankruptcy, the provision

would almost never protect non-union employees. As Congress

knew, “[a]ny debtor – most debtors, more than likely – would be

able to point to language . . . giving them the right to unilaterally

terminate the programs.” In re Farmland Indus., 

. Appellees’ reading therefore “eviscerate[s]” the statute,

making it “essentially only apply to collective bargaining

agreements or other bargained-for programs, and the legislative

history makes it clear that such limitations were not intended.”

cite to subsequent legislative history in

support of their argument that § 1114 does not apply to benefits

that could be unilaterally terminated outside of bankruptcy. In

2007, bills were introduced in both houses of Congress which

would have added a clause stating that § 1114’s protections

apply “whether or not the debtor asserts a right to unilaterally

                                 69
modify such payments under such plan, fund, or program.”

H.R. 3652, 110th Cong. § 9 (2007); see also S. 2092, 110th

Cong. § 9 (2007). Neither bill was enacted into law. Appellees

insist that Congress’ consideration and rejection of these

amendments indicates both that § 1114 does not apply to

benefits that are terminable at will, and that Congress concluded

that extending protection to such benefits was unwise.

       We are unpersuaded. Evidence of congressional inaction

is generally entitled to minimal weight in the interpretive

process. This is especially true where Congress enacts a statute

as clear as this one. In Pension Benefit Guaranty Corp. v. LTV

Corp., 

(1990), a case which also arose in the wake

of LTV’s bankruptcy, the Supreme Court addressed whether the

Pension Benefit Guaranty Corporation (“PBGC”) could base a

decision to order an employer to restore a pension plan on the

employer’s creation of “follow-on” plans, which the PBGC

                               70
believed improperly exploited the agency. LTV relied in part

upon the fact that Congress had considered, but not enacted, an

amendment that would have expressly authorized the PBGC to

prohibit follow-on plans.      Because Congress rejected the

amendment, LTV argued that the Court should infer that

Congress did not want the agency to have this authority. The

Court was not convinced. It explained that:

       subsequent legislative history is a hazardous basis
       for inferring the intent of an earlier Congress. . .
       . It is a particularly dangerous ground on which to
       rest an interpretation of a prior statute when it
       concerns, as it does here, a proposal that does not
       become law. . . . Congressional inaction lacks
       persuasive significance because several equally
       tenable inferences may be drawn from such
       inaction including the inference that the existing
       legislation already incorporated the offered
       change.

(internal quotation marks and citations omitted)

(emphasis added).

      Here, too, we think the best inference to be drawn from

                               71
the subsequent legislative history relied on by Appellees is that

Congress chose not to act because the “existing legislation

already incorporated the offered change.” 

       As we have discussed, a court must give effect to a

statute’s unambiguous plain language “unless it produces a

result demonstrably at odds with the intentions of its drafters .

. . or an outcome so bizarre that Congress could not have

intended it.” 

(internal quotation marks

and citations omitted); see also Holy Trinity Church v. United

States, 

(1892) (“If a literal construction of the

words of a statute be absurd, the act must be so construed as to

avoid the absurdity. The court must restrain the words.”)

(internal quotation marks and citations omitted).        Having

concluded that § 1114 is unambiguous and certainly not

demonstrably at odds with indications of congressional intent in

                               72
the statute’s legislative history, we are left with Appellees’ final

argument: that interpreting § 1114 to give retirees more rights

under Chapter 11 than they would have outside of bankruptcy is

so absurd, notwithstanding the plain language of the statute and

all the indications of congressional intent discussed above, that

Congress simply could not have intended the result. This

argument reflects a major source of confusion about § 1114, and

we believe it is the primary reason that courts have failed to give

effect to the statute as written. Accordingly, although we find

the argument meritless, we address it with particular care.

       Appellees begin by emphasizing that our reading of §

1114 is contrary to the fundamental bankruptcy principle that

“prepetition contract rights and property interests should not be

analyzed differently or enhanced simply because an interested

party is involved in a bankruptcy case.” Visteon’s Br. 33

(quoting In re Delphi Corp., 

, at *2).

                                73
However, as the Supreme Court explained in Butner v. United

States, “[t]he constitutional authority of Congress to establish

‘uniform Laws on the subject of Bankruptcies throughout the

United States’ would clearly encompass a federal statute”

modifying underlying property rights for the purposes of

bankruptcy. 

, 54 (1979) (quoting U.S. Const., Art.

I, § 8, cl. 4). Thus, although property interests are usually

defined by non-bankruptcy law, a “federal interest [may]

require[] a different result.” 

       Section 1114 unambiguously states that federal

bankruptcy law compels a “different result” here, yet courts

have refused to allow that result. For example, the bankruptcy

court reasoned, § 1114 “cannot modify existing [non-

bankruptcy] law absen[t] some specific bankruptcy reason and

there is none here in connection with the issue of non-vested

retiree benefits.” J.A. 3574. Consistent with that court’s

                                74
conclusion, Appellees argue that it would be absurd to impose

restrictions on the modification of benefits in bankruptcy that

ERISA ensures will not be imposed outside of bankruptcy. As

a threshold matter, we point out that this argument sets far too

low a bar for “absurdity.” See 

(Courts

may look behind a statute only when the plain meaning

produces “a result that is not just unwise but is clearly absurd.”)

(internal quotation marks omitted). Furthermore, as we will

now explain, it is also based on a fundamental misunderstanding

of the context in which the RBBPA was enacted, as well as the

practical realities surrounding an employer’s provision of

benefits to its retirees.

       We begin with a brief discussion of how retiree benefits

are treated under ERISA. ERISA was enacted “to promote the

interests of employees and their beneficiaries in employee

benefit plans,” Shaw v. Delta Air Lines, Inc., 

, 90

                                75
(1983), and to “protect contractually defined benefits,” Mass.

Mut. Life Ins. v. Russell, 

, 148 (1985). Although

ERISA contains elaborate vesting requirements for pension

plans, it does not mandate vesting of welfare benefit plans, such

as those providing retiree health and life insurance benefits. See

In re Unisys Corp. Retiree Med. Benefit ERISA Litig., 

, 901 (3d Cir. 1995) (“Unisys II”). “This was not merely an

oversight on the part of Congress.” UAW v. Skinner Engine Co.,

, 138 (3d Cir. 1999). Congress did not impose

vesting requirements on welfare benefit plans because:

       it determined that [t]o require the vesting of those
       ancillary benefits would seriously complicate the
       administration and increase the cost of plans
       whose primary function is to provide retirement
       income. . . . In rejecting the automatic vesting of
       welfare plans, Congress evidenced its recognition
       of the need for flexibility with regard to an
       employer’s right to change medical plans.

Unisys 

(alteration in original) (internal



                               76
quotation marks and citations omitted). Congress believed that

imposing strict requirements on these benefits and thereby

denying employers their valued flexibility would result in

employers choosing not to provide the benefits at all.

Employers are for this reason “generally free . . . for any reason

at any time, to adopt, modify, or terminate welfare plans.”

Curtiss-Wright Corp. v. Schoonejongen, 

, 78 (1995).

       In light of the policy concerns underlying ERISA,

Appellees argue that it is nonsensical to protect during

bankruptcy what Congress purposefully refused to protect

otherwise. That argument, however, is premised on the false

assumption that the Congress that enacted the RBBPA was

content with the fallout from the policy decisions embedded in

ERISA. The legislative history of the RBBPA22 establishes the

       22
         Again, we consider this history not to find the meaning
of § 1114, as its meaning is clear, but as a response to Appellees’
argument that the statute’s plain language is absurd and must be

                                 77
contrary – that many of its drafters were deeply troubled by the

social problems that had resulted from the exclusion of retiree

welfare benefits from ERISA’s protections.

       As we have noted, LTV’s termination of retiree benefits

prompted Congress to study not only the treatment of retiree

benefits during bankruptcy, but for the first time after enacting

ERISA, to evaluate the sufficiency of retiree benefit protections

more broadly. See generally Fair-Weather Promise. The

consensus of many who testified before Congress was that

retiree health benefits were unacceptably vulnerable because

retirees, unlike working employees, were often entirely

dependent on these benefits, and yet the law failed to ensure that

they vested at retirement. Although federal common law under

ERISA was then more protective of retiree benefits than it is

now, the emerging judicial view at that time was that retiree


rejected.

                               78
benefits would vest at retirement, unless the employer clearly

indicated a contrary intent.23 See, e.g., 

Employers,

armed with this knowledge, were including reservation of rights

clauses in virtually all new plans. See, e.g., 

(testimony

of Willis B. Goldbeck, Washington Business Group on Health)

(“[N]o new plans are being written without very explicit

authority to alter or terminate.”). Accordingly, most retiree

benefits, at least for non-union retirees, would soon be entirely

without protection, susceptible to termination not only during a

bankruptcy, but whenever an employer “simply amends the

plan.”24 

       23
           We have held that retiree benefits do not vest, even upon
retirement, unless the employer has clearly and unambiguously
indicated its intent for them to do so See, e.g., 

.
       24
          At minimum, with this extensive legislative history in
mind, we think it virtually impossible that Congress, if it had
intended to exclude unilaterally terminable benefits from § 1114’s
protection, would not have addressed the issue directly. Given its

                                 79
       Some legislators thus concluded that the problem that

must be remedied was not just bankruptcy law,25 but ERISA

itself. See, e.g, 

(statement of Sen. Dodd) (“With the

enactment of ERISA in 1974, the Government for the first time

. . . rightly assumed a role in guaranteeing pension rights in the

private sector. It may be time to consider extending similar

protections to earned health benefits.”).           Although some



acute awareness that many retiree benefits were unprotected
outside of bankruptcy, its decision to draft legislation protecting
any retiree benefit payments takes on an even greater salience.
       25
          Notably, Congress heard testimony emphasizing that
bankruptcy law was neither the primary cause, nor the ideal
solution, for the retiree health care problem. Professor Baird from
University of Chicago School of Law explained: “[t]he basic rule
of bankruptcy law is that it takes rights as they exist outside of
bankruptcy. Retiree health benefits fare poorly in bankruptcy
because of the status of these rights outside bankruptcy. . . . [T]he
solution is not to change the bankruptcy laws, but rather to change
the rights of these retirees under nonbankruptcy law.” Fair-
Weather Promise at 62. He added: “I would caution against trying
to solve the problem by creating a special status for retiree health
benefits in bankruptcy. . . . [If you do so,] you are only curing half
the problem.” 

to be wary about extending the full panoply of ERISA

protections to retiree benefits, see, e.g., 

(statement of

Sen. Heinz) (“[T]he simple solution would be for the Congress

to step in, as we did 12 years ago with pensions, and make these

benefits permanent at retirement, but we also need to recognize

the chilling effect this would have on the employer’s willingness

even to offer these benefits.”), there was still significant support

for extending at least some ERISA protections to the retiree

welfare benefit context, see, e.g., 

(statement of Sen.

Glenn) (expressing support for minimum funding requirements

for retiree health insurance plans); see also 

(staff report

recommending additional protections for all retiree benefits,

including    funding    and    notification    requirements,     and

“explor[ation of] a permanent means for protecting unfunded

retiree health benefits in full.”).

       Ultimately, the RBBPA addressed retiree benefits only

                                 81
during bankruptcy. Nonetheless, the Senate Report indicates

that congressional concern continued to extend further. The

Report discusses generally the “hardship imposed on elderly

recipients when such benefits are suddenly curtailed.” S. Rep.

No. 100-119, 1988 U.S.C.C.A.N. at 684. However, it explains,

“this bill addresses the needs of retirees within [the] context of

the traditional structure of the Bankruptcy Code. The broader

issues associated with retiree benefits remain to be addressed by

other committees of appropriate jurisdiction.” 

extent that some courts have been unable to

understand why Congress would protect certain retiree benefits

during bankruptcy, but not otherwise, the short answer may be

that the RBBPA, like many legislative enactments, was an

imperfect compromise.       Whether the statute was the best

protection that could be agreed upon, or whether it was intended

only as a first step, the RBBPA is the middle-ground that

                               82
became law. That it is a partial solution to congressional

concerns in no way converts it into an absurdity. Virtually all

laws would be absurd if judged by whether they accomplish a

perfect solution to an underlying legislative concern.

       Moreover, since many members of Congress were deeply

upset at the prospect of employers terminating benefits during

retirement, but were either unable or unwilling to require

vesting, there is a compelling logic to protecting these benefits

solely during bankruptcy – when benefits are highly vulnerable,

and limited protections can have a significant impact.

       As the union explained at oral argument, employers do

not offer retiree benefits solely to be charitable. Under normal

conditions, retiree benefits benefit the employer as well as the

retiree.   Retiree benefits are often a form of deferred




                               83
compensation.26 Through their provision, an employer is able to

secure work now, and pay for it only fully in the future.

Furthermore, these benefits boost morale and help an employer

retain qualified employees. Contrary, during “good times,”

market forces do much to restrain an employer from exercising

any retained right to terminate benefits.

       The same is not true during “bad times.” It is then that

retiree benefits are most at risk. Of course, one of the purposes

underlying ERISA is to allow employers flexibility to terminate

benefits when they feel it prudent to do so, as they presumably

might during an economic downturn.                A Chapter 11

reorganization is unique, however, because a reorganizing


       26
          The record certainly shows this to be true here. The
union has proffered substantial evidence that workers at both the
Connersville and Bedford plants agreed to forego wage increases
in exchange for retiree health benefits. According to union
calculations, in order to secure these benefits, each Connersville
retiree deferred $23,973.60 of her/his compensation, and each
Bedford retiree deferred $60,908.00. J.A. 1646-54.

                                84
company avails itself of the statutory privilege of bankruptcy in

order to transition to greater viability. A reorganizing company

hopes to emerge and be profitable, at which point the provision

of retiree benefits might again inure to its benefit. During the

reorganization process itself, though, the debtor faces intense

pressure both internally and externally to relieve itself of all

perceived liabilities, even those it might otherwise be inclined

to keep. See LTV Bankruptcy at 14 (testimony of Richard

Trumka, National President of The United Mineworkers of

America) (“LTV says it is under enormous pressure from its

creditors, banks, and vendors.”); 1987 Senate Hearings at 16

(statement of Sen. Heinz) (Making matters worse in bankruptcy

is that “the banks and in some cases the active workers may

agree” that retiree benefits are “some kind of an albatross.”27).

       27
          For example, the Unsecured Creditors insist that the
retiree benefits here “do not accrete any value to Visteon.”
Unsecured Creditors’ Br. 18 (emphasis added).

                                85
      Thus, as Professor Stabile thoughtfully explains,

bankruptcy distorts the normal decision-making process:

      Outside of bankruptcy, employers evaluate
      changes in employee benefit plans in terms of
      their impact on overall human resource objectives
      as well as financial objectives; decisions about a
      particular benefit are made within the broad
      context of an employer’s total compensation and
      benefits package. That overall framework is
      missing in a Chapter 11 case, where a debtor
      faces pressures that distort nonbankruptcy
      planning and decisions. In Chapter 11, the debtor
      effectively does not act as a sole decision-maker.
      A strong creditors’ committee or even a
      particularly large individual creditor plays a large
      role in the debtor’s decision-making. Within the
      confines of a bankruptcy proceeding, there is thus
      a desire to temporarily freeze the status quo
      regarding benefits, and to allow modification of
      those benefits only in a supervised manner that
      attempts to resolve the competing interests of
      retirees, debtors, and creditors.

Stabile, The Scope of Section 1114 at 1953-54.

      Against this backdrop, § 1114 can be seen as affording

additional protection to retiree benefits just as legal and



                              86
economic pressures converge to encourage a debtor to terminate

benefits based on short-term considerations with insufficient

regard for long-term consequences to retirees or to the debtor

itself.     Protecting these benefits during a Chapter 11

reorganization is thus a measured middle-ground.

          Moreover, courts that have concluded it is absurd to

apply § 1114 to benefits that could be terminated outside of

bankruptcy have often misinterpreted the rigidity of the

section’s protections, and therefore the extent to which the

statute is in tension with ERISA. Section 1114 does not prohibit

the termination of benefits during a bankruptcy proceeding.

Rather, it creates an equitable procedure through which the

debtor can argue the economic necessity of doing so, and the

retirees can counter with their own arguments about economics,

fairness, and equity. The specter of this process may, by itself,

foster an agreement about continuing or modifying retiree

                               87
benefits that would otherwise be impossible to reach. However,

if no agreement is reached, a court can, and in fact must, order

modification (or termination) of benefits if doing so is necessary

to the reorganization, fair to all affected, and clearly favored by

the equities. This is a high standard to reach, but that is

consistent with the belief that reorganization should not take

place, if at all possible, “on the backs” of retired workers. 134

Cong. Rec. S6823-02 (daily ed. May 26, 1988) (statement of

Sen. Metzenbaum). Importantly, though, in its weighing of the

equities, a court will undoubtedly consider whether the debtor

has reserved the right to unilaterally terminate benefits. It would

not be the beginning and the end of the court’s inquiry, and the

court would have to decide how much weight to give that factor

in light of all the other equities. Still, a debtor’s legal rights

under ERISA are not irrelevant during the § 1114 process.

       Additionally, it must be remembered that § 1114’s

                                88
protections terminate upon plan confirmation, when the

distorting pressures discussed above recede. Thus, contrary to

the court’s conclusion in In re N. Am. Royalties, 

(construing § 1129(a)(13) as “vest[ing] . . . benefits after

reorganization”), § 1129(a)(13) does not vest benefits. As we

have explained, upon emergence from bankruptcy, §

1129(a)(13) ensures that a debtor who reserved the right to

terminate retiree benefits has no ongoing obligation, other than

one that may have been voluntarily undertaken during the §

1114 process, to continue to provide benefits.

       Therefore, § 1114 is neither entirely nor permanently in

derogation of underlying contractual rights. For the most part,

all § 1114 guarantees retirees is a voice, and some minimal

amount of leverage, in a process that could otherwise be nothing

short of devastating to them and to their families and




                                89
communities.28 As one legislator explained: “[t]his legislation

will not guarantee continuation of these benefits, but it will

provide a mechanism that will allow the retirees’ position to be

heard.” 133 Cong. Rec. 3,732 (1987); see also 134 Cong. Rec.

S6823-02 (daily ed. May 26, 1988) (statement of Sen. Heinz)

(“While chapter 11 reorganization . . . work[ed] to protect the



       28
           We emphasize that Congress enacted the RBBPA
because it considered the termination of retiree benefits a true
human tragedy. Some legislators reacted to LTV’s termination of
retiree health and life insurance benefits with horror,
characterizing it as “one of the most indefensible and
unconscionable acts of any American corporation in this century.”
LTV Bankruptcy at 28 (statement of Rep. Feighan). Although
Visteon has proceeded with far greater care than LTV, the record
shows that the consequences of its termination of benefits have
nonetheless been catastrophic. Visteon’s unilateral decision to
terminate benefits has left some retirees without medical care
entirely, and forced those too critically ill to do without medical
care to sacrifice basic necessities in order to pay for COBRA
coverage. See J.A. 3624-87. This is to say nothing of the stress
and anxiety that all Visteon retirees have suffered, see 

collective impact of each of these individual tragedies on the
broader Connersville and Bedford communities, see J.A. 1718,
3779. Congress hoped to ameliorate exactly this sort of human
suffering by enacting the RBBPA.

                                 90
interests of the major, and usually secured, creditors, it left the

retirees totally exposed to catastrophic medical losses while

bankruptcy lawyers bickered over the reorganization plan. The

retirees had no way to make their concerns known to the court

during bankruptcy”).         We therefore reject Visteon’s

characterization of § 1114 as a “hammer.” It is much more

accurately characterized as a “microphone,” intended to elevate

the voices of those who would otherwise not be heard above the

din of more powerful creditors carving up the pie of the

bankruptcy estate.

       Appellees attempt to argue that our interpretation of §

1114 results in the statute being the only provision of the

bankruptcy code that improves upon a creditor’s rights in

bankruptcy; the union does not counter that assertion.29

       29
           Of course, as amended, § 1114 contains not one, but two,
distinct provisions improving upon creditors’ prepetition contract
rights, § 1114(e) and § 1114(l).

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Assuming, arguendo, that the statutory scheme of § 1114 is

unique, this result is certainly not absurd given Congress’

concerns. The RBBPA’s legislative history is replete with

references to the unique nature of retiree benefits in a

bankruptcy proceeding, and it is therefore not surprising that

Congress would afford them unique protections. As the Senate

Report noted: “[t]he special treatment accorded retiree benefit

payments is appropriate because of the hardship imposed on

elderly recipients when such benefits are suddenly curtailed.”

S. Rep. No. 100-119, 1988 U.S.C.C.A.N. at 684. Senator Heinz

reasoned that “special” protection was necessary to ensure

equality of treatment: “[Retirees] don’t start out on a[n] equal

footing with other creditors. . . . [This bill protects] retirees from

the kinds of risks no other creditors face.” 1987 Hearings at 20

(statement of Sen. Heinz). The court in In re Farmland Indus.,

Inc. thus found it unremarkable that retirees were uniquely

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protected in bankruptcy:

       Congress doubtlessly recognized that retirees as a
       class are unique in a bankruptcy proceeding and
       that they are deserving of special protection. . . .
       As a general rule, retirees are particularly
       vulnerable when their former employer goes
       bankrupt, because of their ages, their reduced
       incomes, and their inability to replace the benefits
       . . . that are being terminated. Unlike business
       and trade creditors, retirees are unable to set aside
       reserves for possible losses or to pass along their
       losses to other customers. . . . All of these suggest
       a sound basis and rationale for Congress’
       according special protections to retirees who are
       caught up in a Chapter 11 

.

       For all of these reasons, we conclude that the rule of

statutory construction allowing a court to ignore the plain

language of a statute when literal interpretation results in

absurdity is entirely inapplicable here. Far from being “absurd,”

a literal interpretation of § 1114 reveals a remedial and equitable

statutory scheme that, consistent with Congress’ concerns when



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enacting the RBBPA, attempts to prevent the human dimension

of terminating retiree benefits from being obscured by the

business of bankruptcy. If the limited role of federal courts in

a democratic society is to mean anything, the doctrine of

“absurdity” must not be employed merely because interpreting

a statute as enacted yields a result that is contrary to a judge’s

personal beliefs about how things should be.

       The text of § 1114 is plain in meaning and breadth. Its

wisdom is not for us to decide. We need not, and should not, be

concerned with whether retiree benefits should be extended

greater protection during bankruptcy than otherwise; that is a job

for Congress. We need only give effect to the law Congress has

enacted.

                        V. Conclusion

       For the reasons set forth above, we will reverse the

district court’s order that affirmed the bankruptcy court’s order

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permitting Visteon to terminate provision of retiree health and

life insurance benefits without complying with § 1114.




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