PBGC Secures $39M for Pension from Foreign Parent Company

After a lengthy court battle, the Pension Benefit Guaranty Corporation (PBGC) received a pension settlement from a Japanese parent company.

The PBGC and Asahi Tec Corp., a Japanese metal casting and forging company, negotiated a settlement over the pension liabilities of the Metaldyne Corp., a former Asahi Tec subsidiary that went into bankruptcy in 2009. In the settlement, Asahi Tec agreed to pay PBGC $39.5 million.

Asahi Tec purchased Metaldyne, a manufacturer of powertrain and chassis systems based in Plymouth, Michigan, in 2007 for $1.2 billion. When Metaldyne went bankrupt in 2009, the PBGC took responsibility for the underfunded pension plan covering about 10,770 workers and retirees. PBGC asked Asahi Tec to assume the pensions and, after the pension plan terminated, to pay its liabilities totaling nearly $200 million.  

This sparked a protracted legal battle over whether American courts had jurisdiction over a company with no ongoing business in the U.S.

In October 2013, PBGC received a favorable decision from the U.S. District Court in Washington, D.C., ruling that the court had jurisdiction over Asahi Tec and that the company was liable for the unfunded benefits and termination premiums of its bankrupt former subsidiary.

PBGC and Asahi Tec agreed to settle the matter without Asahi Tec admitting to any liability or jurisdiction.

“We are pleased that PBGC and Asahi Tec have come to terms that resolve years of past and future litigation over Metaldyne’s pension obligations,” says Sanford Rich, PBGC’s Chief of Negotiations and Restructuring. “We believe that this case affirms that foreign companies are responsible for the pension obligations of American companies they acquire. We will continue to press this issue when appropriate.”