The former high-flying telecommunications network builder says the changes are appropriate in light of the plummeting value of the firm’s stock and its desire to maintain a good working relationship with workers, whose services the firm would like to retain. The firm said that the inability to make meaningful matches to the 401(k) plan is damaging employee morale, according to Dow Jones.
The firm is currently the target of several suits by a group of participants for breaching their fiduciary duties and ERISA disclosure requirements by failing to disclose that maintaining concentrated investments in Company stock was imprudent, as well as not providing adequate information about the company’s true financial condition, despite offering it as a prudent plan investment .
The requested change has to be approved by Judge Robert E. Gerber of the U.S. Bankruptcy Court in Manhattan. The Dow Jones report said that the firm’s creditors committee is not opposed to the move, but does want to set a limit on the amount of cash depletion.
Since Global Crossing contributed about $2.5 million toward the 401(k) plan in March, the creditors committee says that any additional cash contributions proposed by Global Crossing from March 1 through the end of the year should be limited to $5.9 million – the difference between the $8.4 million projected for 2002 and the $2.5 million already contributed by the company.
Global Crossing wants to match 50% of the first 6% contributed by the participants – one-half the cost of the per-employee matching contribution for 2001. The firm also wants to lift a requirement that forces workers covered under one of its supplemental 401(k) plans to hold their employer’s past matching contributions for five years (a similar restriction in the 401(k) plan was removed prior to the bankruptcy filing).
The creditors committee has said that ex-employees shouldn’t be entitled to receive payments under the supplemental plans on account of pre-petition services.
Bermuda-based Global Crossing filed for Chapter 11 bankruptcy protection on January 28.