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Compliance December 16, 2011
Settlement Reached Between PBGC and Friendly’s
December 16, 2011 (PLANSPONSOR.com) – A settlement has been
reached with Friendly Ice Cream Corp. and the Pension Benefit Guaranty Corp.
(PBGC).
Reported by Tara Cantore
According to news reports, PBGC alleged that Sun Capital (the owner of Friendly’s) illegally moved assets in order for its affiliates to keep control of the chain and avoid paying retirement benefits to nearly 6,000 Friendly’s employees and retirees.
These assets are now being used by another Sun affiliate to bid on Friendly’s as it reorganizes in bankruptcy court, and that effort could artificially inflate the auction price and alienate other potential bidders, the federal agency claimed in its filing.
A judge approved a settlement that would allow Sun Capital and its affiliate to use up to $50 million of its funds toward bidding on Friendly’s at an auction next week.
In court records, Sun Capital has stated the transfer involved debt, or a subordinated note, and not equity, as alleged by PBGC.
Sun Capital’s stalking horse bid is currently valued at $75 million and all bids are due next week.
For more information, see PBGC to Fight Friendly’s over Pension Dump.
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