The Pension Benefit Guaranty Corporation (PBGC) said in a news release that the plan has $18.7 million in assets to cover $25.7 million in benefit liabilities. The agency expects to be responsible for $5.4 million of the $7 million shortfall.
The PBGC stepped in because the Marcal Paper Mills Inc. Retirement Plan 1 for Union Employees would be unable to pay benefits when due and faced abandonment following the company’s bankruptcy proceedings, the agency said.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which terminated as of May 31, 2008. The PBGC became trustee of the plan on September 12, 2008.
Marcal Paper Mills made and distributed household paper products sold mainly by retail grocers in the northeastern U.S.
According to the announcement, the company filed for Chapter 11 protection in the U.S. Bankruptcy Court in Newark, N.J. on November 30, 2006. On January 29, 2008, the court approved the sale of substantially all of the company’s assets to NexBank SSB, an affiliate of Highland Capital Management LP, Dallas, Tex. The transaction closed on May 30, 2008, and did not include the pension plan.