Pension benefits have suffered, too, amid recent corporate distress. In bankruptcy, plans often get moved to the Pension Benefit Guaranty Corp., the U.S. agency charged with providing a safety net for 44 million workers and retirees in more than 29,000 private-sector pension plans.

The benefits the agency provides are capped, so some workers don't get their full pensions. What's more, the recent bankruptcy wave added billions of dollars to the PBGC's obligations, contributing to a $21.9 billion deficit and stoking fears that the agency could have trouble covering pensions in the future.

Delphi Corp. (DPH), an auto-parts supplier, eventually terminated health-care benefits and pensions for retirees before emerging from a four-year odyssey in Chapter 11. Roughly 15,000 Delphi salaried workers sued the PBGC for terminating and taking over their pension plan, which resulted in big cuts to their benefits. They are angry that General Motors Co. agreed to offset pension shortfalls for unionized workers while leaving many salaried retirees to face big cuts.

In Philadelphia, pension funds are tangling with lenders about to buy the publisher of the Philadelphia Inquirer out of bankruptcy proceedings. The pension funds are alarmed that the publisher's new owners won't contribute to the funds, which cover swelling ranks of retirees.

Visteon dubbed its health-care obligations a "crippling financial and competitive burden" and said eliminating the benefits would save it $310 million.

"I felt betrayed," said Wilma Mock, a 77-year-old Visteon retiree who has stents in her heart and kidneys. She spent 29 years at Visteon's now-closed Connersville, Ind., factory working on production lines and measuring car parts. Though eligible for Medicare, "I was expecting them to take care of my medical needs and my life insurance in return for that work."

Lower-court judges who reviewed the Visteon matter concluded that preventing the parts maker from ending benefits wouldn't make sense, since the very purpose of bankruptcy is to allow companies to shed obligations. They also pointed out that protecting the retirees would have the odd effect of giving them better rights in bankruptcy proceedings than outside of court, where Visteon can end their benefits at will.

The appeals court said those judges ignored specific protections for the benefits in bankruptcy. Before ending the benefits "unilaterally," companies must negotiate with retirees to end the plans and show it is crucial to the restructuring.

"For the most part, all [the law] guarantees retirees is a voice, and some minimal amount of leverage, in a process that could otherwise be nothing short of devastating to them and to their families and communities," the appeals court said.

The protections for these benefits in bankruptcy stemmed from steelmaker LTV Corp.'s decision in 1986 to wipe out medical and life-insurance benefits for 78,000 retirees during its bankruptcy case without any notice to its former workers.