A bankruptcy bid by a defunct glass company to avoid paying the International Union of Painters and Allied Trades (IUPAT) Pension Plan around $1.6 million was rejected by a United States Court of Appeals Fourth Circuit panel. According to Judge James Harvie Wilkinson III, Florida Glass of Tampa Bay Inc., which dissolved in 2017, sought to “use a quirk of bankruptcy law to avoid paying what it owes [to] a multi-employer pension plan.”

IUPAT initially filed the lawsuit in 2023 after it sent a formal notice and demand in 2022 for $1.577 million of withdrawal liability. IUPAT’s pension fund is a multiemployer pension plan regulated by ERISA and the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA).

While Florida Glass did not fight the amount, it argued that the suit was filed too late, extending past the six-year statute of limitations after IUPAT’s pension fund filed a claim in 2016. A lower court previously rejected Florida Glass’ statute of limitations defense. The Fourth Circuit panel agreed with the lower court, noting that Florida Glass should not be able to use bankruptcy to avoid payments.

“The defendants in this suit may not use Florida Glass’ bankruptcy as a shield to avoid their obligations,” writes Wilkinson III. “They have always known that their withdrawal from International Painters would leave them on the hook for a large bill, and now that bill has come due.”

Court documents indicate that Florida Glass stopped contributing to the pension fund in 2015 because it stopped performing work covered by the plan’s collective bargaining agreement. A year later, Florida Glass filed for Chapter 11 bankruptcy protection and, in 2017, entered Chapter 7 liquidation proceedings.

In late 2016, IUPAT submitted a proof of claim for withdrawal liability in Florida Glass’ Chapter 11 proceedings. The claim was labeled contingent, a key phrase in the court’s decision, meaning that IUPAT did not clearly determine or assert withdrawal liability at that time.

Five years later, Florida Glass resurfaced on IUPAT’s radar after it was flagged for not contributing to the plan since 2016. In 2022, the pension plan’s trustees determined that Florida Glass and its control group had withdrawn in 2015 and voted to assess withdrawal liability of $1,577,168. The trustees sent out a notice and demand letter and filed a lawsuit in 2023.

In its defense, Florida Glass argued that the suit was filed too late, as the clock should have started running in 2016 when the pension plan filed a proof of claim in its bankruptcy. Under MPAA, a pension plan must notify a company of the amount of withdrawal liability, a payment schedule and a schedule for payment. A bankruptcy proof of claim can qualify as the MPPAA-required notice and demand.

However, the Fourth Circuit determined that this specific instance did not qualify because the proof of claim was labeled contingent, meaning it did not make a clear demand for payment.

“In the building and construction industry, where it takes time and effort to determine whether an employer has in fact withdrawn, the best a plan may be able to do on short notice is label its claim ‘contingent’ and investigate later,” writes Wilkinson III.