As is being played out in the Hostess bankruptcy, pension plans are often very large bankruptcy creditors. Sometimes the plans must be discontinued and that is a business decision that should be allowed. What should not be allowed, though, is for the sponsor and creditors to shortchange the pension plan and the Pension Benefit Guaranty Corporation (PBGC) in the bankruptcy process and continue to shift costs to surviving plans through higher PBGC premiums and possibly the US taxpayer through a bailout.
The bankruptcy code should be changed so that the pension plan and PBGC receive the highest priority in bankruptcy. Other investors and creditors often have ways of hedging their exposure with options, CDSs, etc. The plan and workers do not. They should be made whole as fully as possible.