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Benefits July 2, 2008
Pension Commitment Survives Bankruptcy
July 2, 2008 (PLANSPONSOR.com) - Seems like every
time a company with a pension plan heads into bankruptcy,
they dump those obligations on the nation's private pension
insurer.
Reported by Nevin E. Adams
But it was news of a different sort when Dura Automotive, which makes pedal systems, parking brake mechanisms and transmission gear systems – and which sponsors four defined benefit pension plans that cover more than 4,600 participants, emerged from bankruptcy with those programs still intact. Better still, the plan of reorganization confirmed by the bankruptcy court provides that Dura Automotive will continue to sponsor and maintain those plans.
Continued Committment
A press release from the Pension Benefit Guaranty Corporation (PBGC) notes that, during the bankruptcy case, Dura Automotive continued to make pension funding contributions as required by the Employee Retirement Income Security Act (ERISA), the federal pension law that created the PBGC as the nation’s private pension plan insurer. The PBGC says it actively participated in the bankruptcy proceeding, serving as a member of the official committee representing unsecured creditors.
Charles E.F. Millard , director of the PBGC said, “As Dura Automotive emerges from Chapter 11 protection today, the PBGC applauds the continuation of the company’s defined benefit pension plans. Throughout the restructuring process, Dura indicated that it would keep its plans ongoing, and it’s making good on that promise. Dura should be commended for keeping the pension commitments made to its workers and retirees.”
Actually, keeping that pension committment isn’t as rare as one might think. Since 2005, the PBGC has worked with 13 auto parts companies that have emerged successfully from Chapter 11 protection without terminating their pension plans. These include Federal Mogul Corp, Tower Automotive (see PBGC Commends Towers Automotive for Keeping Pension Obligations _, and Dana Corp (see PBGC Applauds Dana Corp’s Bankruptcy End ).
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 30,000 private-sector defined benefit pension plans.