According to the announcement, the move comes ahead of a series of asset sales while the company operates under Chapter 11 bankruptcy protection. None of the proposed transactions includes assumption of the pension plan.
The agency said if it delayed action until after the sales close, no entity would remain to finance or administer the pension plan, and the possibility of recovering on the agency’s claims for unfunded pension liabilities would be severely diminished. Metaldyne and 30 of its U.S. subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court in Manhattan on May 27, 2009.
The announcement said the Metaldyne Corporation Pension Plan is about 53% funded, with assets of $177 million to cover benefit liabilities of $334 million. The PBGC expects to be responsible for $153 million of the $157 million shortfall.
The agency will take over the assets and use insurance funds to pay guaranteed benefits earned under the pension plan, which ends on July 31, 2009.
Last week, the agency announced it will assume responsibility for the pension plans of 70,000 workers and retirees of Delphi Corp., the nation’s largest producer of automotive parts (see Despite All Efforts, Delphi Plans Go to PBGC ).
In May, the PBGC announced a funding deficit of $33.5 billion, and then-acting director Vince Snowbarger anticipated it would get worse as carmakers struggled (see PBGC Funding Gap Ballooning as Plan Terminations Increase ).
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