Losing Your Retirement in 2012

The latest new thing for major American corporations to do is declare bankruptcy.  All the cool companies are doing it!  Here's how:

• Company X is the brand that everyone in America and a large number of people around the world know and do business with

 

We Worship You With Our Money

• Company X is actually owned by Company Y.

Your Teachers Told You This Math Stuff Would Be Testable

• Virtually no one has heard of Company Y yet their holdings include the internationally known Company X.
• Company X employes a lot of people and has employed many more over the years to whom it either owes pensions to in the future or is currently paying pensions to right now.  
• Company Y doesn't like paying pensions so it declares bankruptcy.
• Bankruptcy proceedings allow Company Y to restructure (read reduce) pension payments to their current and former employees.
• Company X continues to do business during the restructing of Company Y as if nothing is happening.

 Financial Worship Continues Uninterrupted

• Company Y negotiates lower payments for their all their creditors, which they justify by saying that actually having to meet their obligations makes them unable to compete in the marketplace, the business model isn't sustainable (despite the fact that Company X continues to operate), etc.

Who is Company X?

• In late 2011, American Airlines was Company X
• In January of 2012, Hostess became Company X.  You can read more details here.
• I'm probably missing several other major companies that are doing the same thing.

If you're a member of the middle class in America, this should enrage you.  I say that companies shouldn't be allowed to avoid paying what they have promised to pay.

TL;DR: Large corporations have found a new way to screw the little guy.

Update, February 1, 2012: According to this article published today in the New York Times, "American Airlines said Wednesday [today] that it wanted to cut 13,000 jobs and terminate its workers’ pension plans as it seeks to cut its employee costs by 20 percent while operating in bankruptcy court. " 


On April 23, 2012 the New York Times published an update noting that the parent company of American Airlines went to court in an attempt to void its contracts with three labor unions.  Here is the article.