Justia Bankruptcy Opinion SummariesArticles Posted in Kentucky Supreme Court
Kentucky Employees Retirement System v. Seven Counties Services, Inc.
The Supreme Court accepted certificate of a question of law from a federal district court and answered that Seven Counties Services, Inc.'s participation in and its contributions to the Kentucky Employees Retirement System (KERS) are based on a statutory obligation, rather than a contractual obligation.In 1979, the then-Governor designated Seven Counties, a non-profit provider of mental health services, a "department" for purposes of participating in KERS, a public pension system. Thereafter, Seven Counties paid into KERS to secure retirement benefits for its employees. In 2013, Seven Counties initiated bankruptcy proceedings primarily to reject its relationship with KERS as an executory contract. KERS countered that Seven Counties should be required to comply with its statutory obligations to contribute to KERS. The bankruptcy court determined that Seven Counties' relationship with KERS was contractual and, therefore, that Seven Counties could reject the contract in bankruptcy and leave the retirement system. The Supreme Court disagreed, holding that the relationship between KERS and Seven Counties was statutory. View "Kentucky Employees Retirement System v. Seven Counties Services, Inc." on Justia Law