Those claims to pay pension liabilities are part of a series of broad objections the PBGC has registered against EOTT Energy Partner’s L.P. proposed Chapter 11 reorganization plan, according to a Dow Jones report. EOTT Energy Partners has objected to the pension claims.
In its objections, the PBGC, the nation’s private pension insurer, claimed the plan would improperly pay equity holders when unsecured creditors will see only a partial recovery. The US Bankruptcy Code generally requires plans to fully pay all other claims before any payment can be made on junior claims, such as equity holders. In addition to improperly paying junior claims, EOTT Energy Partners’ proposed reorganization plan would improperly release from claims parties not in bankruptcy, such as current and former officers and directors.
“There is no basis for releasing the claims of the Pension Benefit Guaranty and participants against nondebtor fiduciaries who have done nothing to restore any plan losses, and contributed little or none of their assets to the bankruptcy,” the PBGC said.
A hearing on the plan is scheduled Tuesday before Judge Richard Schmidt of US Bankruptcy Court in Corpus Christi, Texas.
EOTT Energy Partners, a crude oil marketer and transporter, filed for Chapter 11 protection October 8 to implement a restructuring plan it prenegotiated with its lenders and a majority of its bondholders.
The company has said its proposed restructuring plan will reduce its debt, restructure its finances and formalize a complete legal separation from Enron Corp, whose EOTT Energy Corp. subsidiary held a general partnership interest in the company.