GENERAL48780

• Permit No: M1977376
• IBM Index Class Name: General Documents
• Doc Name: JOINT MOTION 06/04/97 FOR ORDER IN AID OF CONSUMMATION OF DEBTORS & RAILROAD TRUSTEES
• Media Type: D
• Archive: No

the provision, of the Plan. The Cozen shell raisin jurisdiction
to enter such orders, judgments, injunction, and rulings.
Paragreph 34 of Debtori Confirmed Plan provides in pertinent pan That the Reorganized
Debtorc wmply with eppliu6le law. Counel have advised ReorgenizW CFBcI that failure to
comply with iu legal obligation with respect to the Old VEBA end the Equiable Adversary
Proceeding (az Identified in paregreph I I and v further deac•ibed herein) could subject
Reorgmized CPJcI to claims trader the Employee Retirement Income Security Act
('ERISA'). Io that regard, the USWA has asserted that it has claims od behalf of the
Debtore' retired egalast the Dehtore end Reorganized Debmre is wnnectioo with the funds
in the Old VEBA (see paregreph 9 wncerning m explanation of the Old VEBA) and Ponds
that are subject to the Equitable Adversary Proceeding (see paragraph l l wnceroing an
explamuaa of the Equitable Adversary Proceeding). Because We action ducribed herein
should resolve elaima asserted by We USWA againt the Debtors end Reorganized Debtors,
jurisdicdoa dso exists pursuant to section 66 of Debtors' Costumed plan that provides in
penioeot pert that:
...the Coun will reuin Jurisdiction to the fullest extent
permitted by law Including to enter any orders or to take my
action specified m this Plap including, without limiution, the
following: ... (b) to hear end determine ell claims ... .
3. Until epproxlmately 1983 or 1984, The Fquiuble Life Assurance
Society of the United States ('Equitable') provided both a basic benefit pacluge and a major
medial package [o CFd:I retired end active employees. The bole benefit package was
available to all active employes end retirees at CF&I'a expense. CF&I also paid the cost of
the major medical beaefiu under the Equitable policy for the active employees. However,
the major medical benefiu were optlonl for the retirees, with the retirees paying the entire
wst of that optianl wverage.
6. In 1983 or 1984, Equitable's basic benefit wverage was terminated and
the bait benefit package was then provided by CF&1 through self-inurance. This basic
coverage applied to active erttployes and to retirees. CF&1'e self inurance also wvered
major medial for the active employes; however, major medial wverage for the retirees
continued to be provided duough Equitable et Ne retirees' expene.
7. As of January 1, 1987, ell retirees in the Pueblo area ceazed being
wvered under the self Insurance and the Equitable plan and instead received both basin enJ
major medial wverege through two NMOs in Pueblo. Those retirees residing autsidc of
Pueblo wntinued to Gave major medial wverage through Equitable and basic coverage
through CF&I'a self inurena. .
8. In late 1988 or early 1989, Equitable advised CF&1 that it was
terminating the major medial coverage for retirees outside the Pueblo area effective July 1,
1989.
9. Effrxtive July 1, 1989, CF8c1 created the Old VEBA to provide the
major medial coverage for the retires living outride of the Pueblo ard and their dependents
(the 'Retirees'). The Old VEBA became the successor to the major medial wverage for
Ne Retirees residing outside the Pueblo area that had been provided tlirough Equitable. The
Old VEBA was funded entirely by the Retirees.
10. During the worse of Debtors' benlauptcy uses, Po approximately June
of 1992, Equitable released 5368,701.36 which it had been holding es part of a fund
Equitable was seeking to set off hazed on a claim against CF&I for increased life inurance
premiums, which alleged right waz azsened in a use fled in the U.S. District Court for the
Disvict of Colorado, Cue No. 96B~867 (the 'Colorado District Court Litigation').
Reorganized CFdcI undersunds the «azon Equitable released the 5368,701.36 was hearse
Equitable determined this sum represented en excess over the maximum amount of
Equimble'a alleged cle'un for an increase in life inurance premiums and therefore the
maximum amount Equitable believed it could set of(. Because all funds released by
Fqulte6le ro CF8:1 were mould that originally had been paid by the Retirees prior to July 1,
1989, the entire 5366,701.36 waz deposited into the account of the Old VEBA. The
Agrcement creating the Old VEBA provides that usual end reazonble expenes of
administering the Old VEBA rosy be paid is whole or in part by the Trustee out of principal
and interest of Ne Tmat Fund. From 1993 to the prdcnt, the Reorganized Debtors have
paid expenes atuibuuble to the administration of the Old VEBA or have determined Nat
amounts owing by the Old VEBA for expend enribuuble to the adminisuetioa of the Old
VEBA tool approximately 532,000. These expenses were incurted vt cawection with
inurance premiums for fiduciaries o! the Old VEBA, annul audit expend and legal
expenea iocuned is wnjunction with the edministretion of the Oid VEBA. The Reorganized
Debtors estimate that expenses Incurted and to be intoned in conjunction with the proposed
distribution sought by this Motion will be an additional 520,000. Expenses atvibu[able to the
administration of the Old VEBA and expenes intoned in coMCCtion with distribution from
the Old VEBA will be subject to Court approval. The Reorganized Dcbrors eslimetc the
balance available for distribution, after all costs of administration, both pazt and furore, will
be approximately 5663,000.
I1. Pursuant to a stipulation and order entered in the Colorado District
Conn Litigation, Reorganized CF&I filed and prosecuted Adversary Proceeding No.
94PB 2451 against Equitable (the 'Equitable Adversary Proceeding'). In the Equitable
Adversary Proceeding, Reorganized CF&I aoughl various farms of relief including
declaratory relief ro deny setoff sought by Equitable basal on iu claims against CF&i iur
increased life insurance premiums end an order for payment of reserves by Equitable to
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