PBGC Objects to Philadelphia Newspapers'
Bankruptcy Exit Plan
September 28, 2009 (PLANSPONSOR.com) - The Pension
Benefit Guaranty Corporation is objecting to Philadelphia
Newspapers LLC's plan for restructuring after bankruptcy,
asking for more details on how the publisher of the
Philadelphia Inquirer will address its pension
obligations.
The Wall Street Journal reports that agency attorneys
said in papers filed Thursday with the U.S. Bankruptcy
Court in Philadelphia the publisher's proposal provides
"for the improper and unlawful treatment" of its
pension plan because it claims it can deal with the program
as it would other contracts, choosing to accept or reject
the pension plan as part of the bankruptcy process. The
attorneys also said Philadelphia Newspapers failed to
definitively state whether it will continue the pension
program for 251 current and former workers, or if it will
use bankruptcy to dump the plan.
Philadelphia Newspapers' restructuring proposal
"fails to give creditors adequate information
regarding the [company's] obligations and liabilities
to the pension plan and PBGC," agency attorneys said,
according to the WSJ.
If the publisher does intend to dump the plan it must
follow specific laws that apply to the termination of
pension programs, PBGC pointed out in the court filing. The
agency said Philadelphia Newspapers has an unfunded pension
liability of about $10.3 million.
The news report said the newspaper publisher last month
submitted a bankruptcy-exit plan that would sell the
company to a group of investors seeking to pump $35 million
into the company and provide it with a $17 million letter
of credit. That proposal drew protests from lenders who are
pushing to make their own bid for the company.
A hearing to consider whether the bankruptcy-exit plan
can be sent to creditors for a vote is scheduled for
Tuesday.
The PBGC's court filing is
here
.
Rebecca Moore
editors@plansponsor.com