June 16, 1992
TO: PENSION MEMBERS NO. 13-92
RE: SUPREME COURT HOLDS ERISA PLAN INTERESTS EXCLUDED FROM
BANKRUPTCY ESTATE
__________________________________________________________
The U.S. Bankruptcy Code generally provides that the
debtor’s estate in a bankruptcy proceeding includes all interests
of the debtor in property. Section 541(c)(2) of the Bankruptcy
Code provides an exception for any beneficial interest in a trust
if that interest is subject to a restriction on transfer "that is
enforceable under applicable nonbankruptcy law."
Attached is a copy of the U.S. Supreme Court’s decision in
Patterson v. Shumate, which holds that a plan provision
prohibiting alienation of benefits pursuant to section 206(d)(l)
of ERISA constitutes an enforceable restriction on transfer under
"applicable nonbankruptcy law" for purposes of section 541(c)(2)
of the Bankruptcy Code. Accordingly, a debtor may exclude such
interest from the property of the bankruptcy estate.
We will keep you informed of further developments.
Kathy D. Ireland
Associate Counsel - Pension
Attachment