PBGC Demands a Cut of Weirton Bankruptcy Money

November 5, 2003 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) has filed an objection to Weirton Steel's bankruptcy reorganization plan, in the agency's attempt to get a cut of the company's $225 million debtor-in-possession financing package.

The move by the PBGC comes after the agency swooped in and assumed control over t he Weirton, West Virginia-based company’s pension plan last month (See  PBGC Assumes Weirton Steel Plan ), according to an Associated Press report.   By the time the PBGC got there, Weirton’s plan was only 39% funded with $530 million in assets to cover almost $1.35 billion in benefit liabilities.   Overall, the PBGC’s move affected some 3,500 current workers and as many as 10,000 retirees and dependents.

Assuming t he steel company’s plan, which has assets of $530 million and nearly $1.35 billion in liabilities, though did not come cheap for the PBGC.   In documents filed Tuesday with the US Bankruptcy Court in Wheeling, West Virginia, the PBGC said it has claims totaling $189.6 million against Weirton Steel for expenses that occurred before and after the company’s Chapter 11 filing in May (See  Steel Woes Push Weirton Into Bankruptcy ).

The PBGC is among four creditors that have filed objections to Weirtons’ bankruptcy plan with the bankruptcy court.   Joining the nation’s private pension insurer in the creditor line was the West Virginia Workers’ Compensation Commission, Deutsche Bank Trust Co. and Transamerica Equipment Financial Services Corp.   The four all say the current plans fails to address how the company will cover a combined $300 million in liabilities.  

Currently, the nation’s fifth-largest integrated steelmaker is operating under a $225 million debtor-in-possession financing package while it reorganizes.