PBGC Applauds Dana Corp's Bankruptcy End

February 1, 2008 (PLANSPONSOR.COM) - Auto parts supplier Dana Corp. won public kudos from the Pension Benefit Guaranty Corporation (PBGC) for emerging from federal bankruptcy protection with its defined benefit plans intact.

A PBGC news release said that during Dana’s bankruptcy, the company continued to make its legally required funding contributions and consolidated 34 defined benefit plans into seven pension funds. The changes reduced Dana’s minimum funding contributions by $60 million through the year 2012.

The nation’s private-sector pension insurer said Dana’s actions “significantly improve” the financial health of Dana’s seven plans that cover more than 53,000 participants, of which almost 15,000 are active employees. By reducing the number of plans, Dana made its pension obligations more affordable and lessened the possibility that the plans would be assumed by the PBGC in the future, the agency said.

“Dana’s pension plans will remain under company sponsorship, which means that no worker or retiree will lose a single hard-earned retirement dollar,” said Charles E.F. Millard, PBGC director . “I am pleased to say that by working with Dana’s management over the course of the bankruptcy process, the PBGC helped achieve this success. Dana should be commended for keeping its pension commitments to its workers and executing a successful turnaround that didn’t rely on the PBGC as part of its exit strategy from Chapter 11.”

The PBGC announcement said the Dana situation was the latest in a series of transactions in which the PBGC has worked with companies to help them emerge from bankruptcy with their DB plans still under the employer’s control.