Federal appeals court overturns ruling allowing Visteon to terminate retiree health benefits

Ruling on Visteon retiree benefits overturned

WILMINGTON, Del. — A federal appeals court has overturned rulings allowing auto parts supplier Visteon Corp. to terminate its retirees’ health and life insurance benefits.

In a ruling Tuesday, the appeals court in Philadelphia sided with attorneys representing some 2,100 retirees from two Visteon manufacturing plants in Indiana.

A Delaware bankruptcy judge concluded in March that the retirees did not have vested rights in the benefits, and that Van Buren Township, Mich.-based Visteon could terminate them unilaterally. That decision was upheld by a federal district court judge in Delaware.

But the appeals court agreed with the retirees that Congress, through the bankruptcy code, intended to restrict a debtor’s ability to modify or terminate retiree benefits during a Chapter 11 case, regardless of whether it could terminate those benefits outside of bankruptcy.