A January 15 pension contribution is now required after lump-sum distributions from the KRP triggered a minimum funding provision under the Employee Retirement Income Security Act (ERISA).
Failure to make the payment would cause Kaiser to fall into non-compliance with ERISA’s minimum funding requirements and, in turn, the company would be prohibited by ERISA from making lump-sum distributions from the KRP to employees who retire after December 31.
However, due to Kaiser’s current state of reorganization, most of this payment would be classified as a pre-bankruptcy obligation, and the Bankruptcy Code generally does not permit payment of such obligations without Court approval.
Because this amount represents a small portion of the total liabilities that must be addressed in Kaiser’s reorganization, the company does not currently expect to seek such approval.
Kaiser therefore is looking at other possible impacts on the company if the required payment is not made. Those impacts include possible technical default under Kaiser’s Debtor-in-Possession (DIP) credit facility, which, if not cured or waived, would prevent the company from accessing this facility.
Also, Kaiser has had a preliminary discussion with the Pension Benefit Guaranty Corporation (PBGC) about the company’s pension plans. The company reported no information, in respect to that meeting.