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Compliance October 22, 2007
PBGC Takes on Brazilian Air Carrier's Pension Plans
October 22, 2007 (PLANSPONSOR.com) - The Pension
Benefit Guaranty Corporation (PBGC) is taking over two
pension plans that cover the 800 U.S. employees of Brazilian
air carrier Varig S.A.
Reported by Adrien Martin
According to a press release , the Varig Brazilian Airlines Pension Plan and the Varig Brazilian Airlines Hourly Pension Plan are 74% funded, with $59.4 million to cover about $80.6 million in liabilities. The PBGC said it expects to be responsible for the full $21.2 million shortfall.
The company entered reorganization proceedings in Brazil in June 2005 and filed for bankruptcy in the U.S. Bankruptcy Court in Manhattan.
Varig’s former cargo unit Varilog purchased
most of the company’s operating assets and
intellectual property for $20 million in cash and $46
million in debt instruments on July 20, 2006. The
transaction did not include the pension plans, so the
PBGC stepped in because the company wouldn’t be able
to pay its benefits when they were due, the agency
said
Varig no longer has operations in the U.S. and has no flight operations in Brazil.