In a filing with the US Bankruptcy Court in Manhattan, the nation’s private pension insurer said that including units that aren’t in bankruptcy in the sale to International Steel violates the US Bankruptcy Code and state law, according to Dow Jones.
The report, based on a copy of the PBGC objection obtained by Dow Jones Newswires, said that if subsidiaries not in bankruptcy are included in the sale, bidding procedures need to be modified to distinguish their values, and proceeds from their sale segregated and distributed to their creditors, which include the agency.
A hearing is scheduled for today on the proposed auction procedures and another is set for April 22 to consider the actual sale, according to the report.
In its motion seeking court approval for the sale, Bethlehem Steel said it plans to settle the claims of the PBGC and beneficiaries under the Coal Act. In December the PBGC announced plans to take responsibility for paying pension benefits to 95,000 workers and retirees of Bethlehem Steel, the nation’s second largest integrated steel maker. That would be the largest plan ever taken over by the PBGC in its 28-year history, both in terms of the number of participants and the amount of underfunding (see PBGC Takes On Its Biggest Liability Yet , Steel, Airlines Weigh on PBGC ). In December the PBGC estimated that Bethlehem’s plan was just 45% funded
The PBGC’s objection claims that Bethlehem Steel and all the businesses it controls are liable to the agency for the claim under the Employee Retirement Income Security Act (ERISA). The agency said the units not in Chapter 11 could have “substantial value,” citing Bethlehem Steel’s prior annual report filed with the Securities and Exchange Commission.