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Labor unions lost a major battle when the U.S. Court of Appeals for the Third Circuit held in In re Trump Entertainment Resorts Inc. that a bankruptcy court retains power to reject a labor contract even after it expired by its own terms, according to Rochelle’s Daily Wire today. The Third Circuit’s decision on Friday was the first appeals court to decide the issue. Lower courts are split. Click here to read the full summary. 

Additionally, an analysis by the Washington Post today found that Donald Trump’s statements during the Presidential campaign about his companies’ bankruptcies play down his personal role in the downfall of the Taj Mahal. For months in 1987, Trump maneuvered to take control of the unfinished Taj Mahal casino in Atlantic City as he snapped up stock in the parent company after its owner died and then made a surprise bid to take the company private. With the Taj, along with two casinos he already owned in the city, Trump could dominate gambling on the East Coast. But first he needed to convince state gambling regulators that he was financially stable and could raise enough cash to complete the $1 billion project. On Feb. 8, 1988, at a licensing hearing in front of the state Casino Control Commission, Trump said that because of his reputation as a dealmaker, he said, bankers were lining up to lend him money at prime rates. That meant he could avoid the risky, high-interest loans known as junk bonds. Trump received the approvals he needed for the Taj, but the prime-rate loans never materialized. Read more.

A government pension safety net will take responsibility for the pensions of more than 2,700 current and future retirees that will be left behind in connection with the sale of Walter Energy Inc., Dow Jones Daily Bankruptcy Review reported today. The Pension Benefit Guaranty Corp., the U.S. government's pension insurer, said yesterday that it will take over the underfunded plan, which is set to end today, and cover the $96 million shortfall between the plan's assets and the benefits owed to pensioners. Walter Energy sought chapter 11 protection in July, one of several coal miners that have turned to bankruptcy in the face of declining coal prices and substantial legacy liabilities. The Birmingham, Ala., company is preparing to sell its core Alabama mining operations to its lenders for $1.25 billion in debt forgiveness, subject to higher bids.

Bankruptcy Judge Tamara Mitchell granted approval for coal producer Walter Energy Inc. to reject its labor agreements and end retiree benefits, which the bankrupt U.S. company said was needed in order to sell off its operations, given the industry's dire straits, Reuters reported today. Judge Mitchell said in an opinion published on Monday that Walter's situation would go from bad to worse if it had to maintain its collective bargaining agreements and retiree benefits. "The court finds credible that no potential buyers have an interest in assuming such obligations, let alone assuming such obligations and investing such new capital," Judge Mitchell said in her opinion. The company has in place a purchase agreement with Coal Acquisition LLC, which is made up of Walter's lenders. An auction is scheduled for Jan. 5, and Mitchell will be asked to approve the auction results at a sale hearing on Jan. 6.

Unions representing the company's workers say they are in danger of being shortchanged, while shareholders of the old AMR Corp. get another generous payoff, Dow Jones Newswires reported on Friday. Hundreds of millions of dollars of valuable stock is still stored up in bankruptcy reserve accounts, waiting for a final reckoning of the accounts from the 2011 bankruptcy of AMR, parent of American Airlines. AMR's bankruptcy was a rare case that produced value to spare for shareholders. According to court papers, investors in the old equity received more than $9.5 billion of new American shares in the four months following AMR's bankruptcy exit. Unions representing pilots, flight attendants and other workers of AMR Corp. say that they are being asked to take a haircut when the remaining stock is handed out while investors in the old equity get more than their fair share. American spokesman Casey Norton said that the company will respond with a court filing and is reviewing a bankruptcy court motion the unions filed on Tuesday, criticizing the company's distribution plan.

A union lawyer negotiating with Walter Energy Inc. said that miners would rather gamble jobs at the bankrupt coal producer than make additional concessions, a stance the judge called “a game of chicken,” Bloomberg News reported yesterday. Walter Energy filed for bankruptcy in July and is set to put its assets up for auction Jan. 5. As an opening bid, lenders have offered to exchange $1.25 billion in debt and pay $5.4 million in cash. That agreement hinges on a consensual resolution with unions or court approval to reject collective-bargaining agreements. The union’s lawyer told Bankruptcy Judge Tamara O. Mitchell yesterday that issues involving worker safety were too important to bargain away. Judge Mitchell cautioned that under such a strategy, the union “stands to lose everything.” If the union wins, “the buyer walks because there’s no sale and then all the employees are out of a job, the mines close down” and there won’t be benefits for anyone, Judge Mitchell said. Sharon Levine, the attorney for the United Mine Workers of America, said that the union’s stance is “not a threat.”

The bankrupt operating unit of Caesars Entertainment Corp. (CEC) has appealed a ruling that would enforce payments of nearly $364 million in pension liabilities, Reuters reported on Friday. Caesars Entertainment Operating Corp. (CEOC) had asked the bankruptcy court to shield its parent from liability demands by the National Retirement Fund, a pension fund that covers thousands of employees across five affiliated Caesars companies. Bankruptcy Judge Benjamin Goldgar denied that request earlier this month, saying that CEOC's bankruptcy does not protect its parent. The dispute is one of many Caesars faces in its $18 billion chapter 11 case and it is not the first time that Judge Goldgar has denied a request to protect its parent from creditors' claims. In July, Judge Goldgar decided to allow lawsuits from hedge fund creditors against the parent to proceed. Caesars appealed the ruling but it was later upheld by U.S. District Judge Robert Gettleman. Caesars' lawyers have argued that claims against CEC could jeopardize the parent's ability to contribute cash to a reorganization plan to pull the casino group out of bankruptcy.

The union contracts ratified at Ford Motor and General Motors last week were the most generous for workers in more than a decade and represented a striking shift from years of cuts and stagnant wages, the New York Times reported today. But for automakers, the pay raises will add to the pressure to maintain profits and could spur a shift of less-profitable car production to Mexico from the United States. Ford and Fiat Chrysler, for example, are considering moving some passenger car production to lower-wage factories in Mexico from American plants. In their place, the companies would make more high-profit trucks and sport utility vehicles in the United States. That shift could cause production issues down the road, particularly if gas prices increase and temper consumer demand for pickups and sport utility vehicles. “From the company’s point of view, the U.S. is where you have to build your premium products,” said Harley Shaiken, a University of California, Berkeley professor who studies the auto industry. “To cover the cost of labor, you have to go upscale.”

The California Public Employees’ Retirement System (CalPERS) disclosed yesterday that for the first time that it had paid $3.4 billion since 1990 to the biggest private equity managers on Wall Street, including like firms like Carlyle, Blackstone and Apollo, the New York Times DealBook blog reported yesterday. CalPERS also said that it had made $24.2 billion in profits from private equity firms over the same period, according to its new data-collecting program, called Private Equity Accounting and Reporting. The move by CalPERS, the country’s biggest state pension fund, to disclose the details of its investment profit — called carried interest — could help to pave the way to more transparency in the private equity industry. The pension industry, under public scrutiny and faced with ballooning deficits and disappointing performance, is beginning to push for more transparency. For the first time, this year CalPERS will pay more money to retirees than it receives from its investments and contributions. Other state pension funds have fared far worse. In Pennsylvania, the state pension fund is facing a $50 billion shortfall, for example.

Public pensions are owning up to a painful truth about their private-equity bets: They never totaled the bill, the Wall Street Journal reported today. For years, officials who oversee retirements for teachers, firefighters and other government workers said they failed to either ask or disclose how much private-equity firms kept in performance fees, the biggest source of profits for outside money managers. Now, pension funds from New York to California are doing those calculations and revealing much bigger sums than they had ever made public. The size of the expenses could mean tougher scrutiny of private-equity investments and more pressure to cut back those holdings or negotiate lower fees. The California Public Employees’ Retirement System is expected to announce this week that it paid private-equity firms billions of dollars more over the past 17 years than it had previously disclosed. Similar assessments made public recently by retirement systems in New Mexico, South Carolina, Kentucky and New Jersey showed total costs were as much as 100 percent higher than originally disclosed.