More than 4,400 current and future retirees of Constar Inc. will be assisted by the PBGC as a result of the company selling most of its assets in bankruptcy proceedings and the buyer not assuming responsibility for the existing pension plan.
The PBGC says it will pay all pension benefits earned by Constar’s retirees up to the legal limit of about $59,320 for a 65-year-old. Current retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
The Constar Inc. Pension Plan is 66% funded with $89.6 million in assets to pay $135 million in benefits, according to PBGC estimates. The agency expects to cover $44.7 million of the $45.4 million shortfall.
After losing Pepsi, its largest customer, Constar and its affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Delaware, in December 2013. The company intends to sell the majority of its assets in two separate auctions—one for its domestic assets, and the other for the assets or stock of its affiliates in the United Kingdom and Holland.
Currently, the lead bidder is Amcor Rigid Plastics USA, Inc. The auctions were held on February 6. The sales hearing is scheduled for February 10.
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