In a lawsuit filed against the Pension Benefit Guaranty Corporation (PBGC), the company asked a US Bankruptcy Judge to block the plan seizure efforts by the federal agency that insures private sector pensions, according to an Associated Press report. Enron accused the federal agency of frustrating its financial reorganization efforts and usurping the bankruptcy court’s authority to consider claims against the company.
The PBGC is trying to proceed with the action it filed June 3 in federal court in Houston – not in the US Bankruptcy Court in Manhattan where the company’s Chapter 11 case is underway – to terminate the four underfunded plans (See PBGC Strengthens its Enron Bankruptcy Claims ). The PBGC has filed claims against Enron totaling $321.8 million for the four pension plans and another pension plan, the Portland General Electric Co. plan, which isn’t subject to the agency’s termination action. Portland General, an affiliate of Enron, isn’t part of the bankruptcy proceedings.
The four plans at issue have roughly 17,000 participants and include:
- the Enron Corp. Cash Balance Plan
- Garden State Paper Pension Plan
- Enron Financial Services Pension Plan
- San Juan Gas Co. Pension Plan.
“Through its ‘forum shopping,’ the PBGC is attempting to accomplish in the US District Court for the Southern District of Texas what it could not accomplish in the bankruptcy court,” Enron charged. By pursuing the termination action, Enron also accused the PBGC of trying to elevate its claims, which haven’t even been resolved, above those of similarly situated creditors and avoid treatment under the plan.
PBGC Executive Director Bradley Belt fired back in an agency statement. “Enron has repeatedly said that it wants to do a standard termination of its pension plans, where a private-sector insurance company takes over the obligations and pays promised benefits. That would be the ideal outcome for participants and the pension insurance program,” Belt asserted in the statement.
“Unfortunately, by its own admission, Enron has failed to make any progress toward executing a standard termination. With today’s action, Enron raises even more doubts about its willingness to keep its pension promise to workers and retirees. If Enron fails to carry out its commitment to do a standard termination, the PBGC is ready to assume the pension obligations, pay participants their guaranteed benefits, and pursue its claim against Enron for the full amount of the underfunding.”