The Pension Benefit Guaranty Corporation (PBGC) has taken over the underfunded pension plan of four companies in just the past week alone. The federal corporation that guarantees payment of private-sector defined benefit pension plans, said on Monday that it will assume responsibility for nearly 3,000 employees and retirees of bankrupt snack food manufacturer Tom’s Foods, based in Columbus, Georgia. Tom’s Foods is the latest company to tap the PBGC’s funds.
The PBGC said it stepped in because Tom’s Foods missed nearly $4.5 million in required pension contributions and the pension plan will be abandoned as a result of the sale of substantially all of the company’s assets. As a result of the PBGC’s action, retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they reach retirement age.
The PBGC estimates that the Tom’s Foods pension plan is about 51 percent funded, with about $44 million in assets to cover some $87 million in benefit liabilities. The PBGC said it expects to be responsible for virtually all of the $43 million shortfall. Tom’s Foods filed for Chapter 11 protection in April 2005. In October 2005, it was purchased by Charlotte-based Lance Inc. for $40.2 million plus the assumption of some company liabilities. The transaction did not include the pension plan.
Meanwhile, on Thursday the PBGC announced that it had assumed responsibility for the underfunded pension plan of furniture manufacturer Keller Manufacturing Co., based in Louisville, Kentucky. That plan covers 477 former employees, and is 66 percent funded, with nearly $9 million in assets to cover $13.5 million in benefit liabilities. The PBGC expects to be liable for the entire $4.6 million shortfall.
Also on Thursday, the PBGC revealed that it would take over the underfunded pension plan of Oklahoma Fixture Co., a bankrupt manufacturer of retail store fixtures and architectural woodwork in Tulsa, Oklahoma. The company’s plan covers 464 former employees, and is 63 percent funded, with a little more than $4 million in assets to cover nearly $7 million in benefit liabilities. Similarly, PBGC expects to be liable for the entire $2.5 million shortfall.
In addition, the PBGC announced last week that it assumed responsibility for the underfunded pension plan of bankrupt law firm Coudert Brothers LLP, which once boasted an international practice with 28 offices in 15 countries. The law firm filed for Chapter 11 protection in September 2006, one year after the firm lost two lawsuits, including a $2.5 million malpractice suit filed by a former client, Portfolio Media. Coudert Brothers voted to dissolve the partnership and discontinue its practice in August 2005, after a planned merger with global law firm Baker & McKenzie fell through.
The Coudert Brothers pension plan covers about 460 employees and retirees, is 66 percent funded, with some $17 million in assets to cover $26 million in benefit liabilities. The PBGC estimates it will be liable for $8.5 million of the $9 million shortfall.