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Compliance December 24, 2007
Midwest Firm Comes to Terms with PBGC
December 24, 2007 (PLANSPONSOR.com) - A Louisville,
Kentucky, firm has come to terms with the nation's private
pension insurer regarding its pension obligations - but at a
figure well short of the estimated unfunded
liabilities.
Reported by Nevin E. Adams
Keller Manufacturing Co. has agreed to pay $400,000 as part of a settlement with the Pension Benefit Guaranty Corp. (PBGC) in connection to Keller’s termination of its employees’ pension plan in 2006.
Keller had previously filed notice, and was in negotiations with the PBGC, seeking a “distress termination” of the firm’s pension plan, which was terminated on July 26, 2006. The PBGC became trustee of the Plan on June 29, 2007, and announced that it had assumed responsibility for the plan’s unfunded liabilities on July 13, 2007 (See PBGC Takes On Keller Manufacturing Pension Plan ). The nation’s private pension plan insurer estimated at the time that the furniture manufacturer’s plan, which covered 477 former employees, had just $9 million in assets to cover $13.5 million in liabilities.
No Impact on Participants
According to a press release from the Louisville, Kentucky-based firm, the agreement settles all liabilities of Keller and its subsidiaries with respect to the plan. The firm also said that “…the settlement agreement and the termination of the Plan will have no impact on most Plan participants who will continue to receive the benefits they are entitled to receive under the Plan subject to limitations on the maximum amount of benefits under federal pension law.”
After closing plants in Corydon and New Salisbury, Indiana, and making an unsuccessful attempt to sell imported furniture under the Keller mark, the company decided in January 2005 to exit the furniture business and search for a new operating business. According to Business First of Louisville, in January 2006, Keller purchased an 85% stake in Louisville-based Paragon Door Designs Inc. for about $1.14 million in cash. When it filed to terminate the pension plan, Keller said income from its stake in Paragon could not support the pension plan, and wanted the PBGC, which insured the plan, to pay the pensions.
Keller remains a separate legal entity with a small board of directors that oversees Paragon.