The Wall Street Journal reports that agency attorneys said in papers filed Thursday with the U.S. Bankruptcy Court in Philadelphia the publisher’s proposal provides “for the improper and unlawful treatment” of its pension plan because it claims it can deal with the program as it would other contracts, choosing to accept or reject the pension plan as part of the bankruptcy process. The attorneys also said Philadelphia Newspapers failed to definitively state whether it will continue the pension program for 251 current and former workers, or if it will use bankruptcy to dump the plan.
Philadelphia Newspapers’ restructuring proposal “fails to give creditors adequate information regarding the [company’s] obligations and liabilities to the pension plan and PBGC,” agency attorneys said, according to the WSJ.
If the publisher does intend to dump the plan it must follow specific laws that apply to the termination of pension programs, PBGC pointed out in the court filing. The agency said Philadelphia Newspapers has an unfunded pension liability of about $10.3 million.
The news report said the newspaper publisher last month submitted a bankruptcy-exit plan that would sell the company to a group of investors seeking to pump $35 million into the company and provide it with a $17 million letter of credit. That proposal drew protests from lenders who are pushing to make their own bid for the company.
A hearing to consider whether the bankruptcy-exit plan can be sent to creditors for a vote is scheduled for Tuesday.
The PBGC’s court filing is here .
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