PBGC Takes Plans from Defunct VA Textile Firm

June 22, 2009 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) has assumed responsibility for the pensions of more than 6,000 former workers and retirees of Dan River Inc., a home textile products retailer in Danville, Virginia.

According to a news release from the nation’s private-sector pension insurer, it stepped in because Dan River is liquidating substantially all of its assets in bankruptcy proceedings and its pension plans are insufficiently funded and would be unable to pay benefits when due. The three plans involved are the Dan River Inc. Hourly Retirement Plan, the Dan River Inc. Salary Retirement Plan, and the Bibb Company Pension Plan.

The announcement said the plans are collectively 46% funded, with assets of $40 million to cover $86 million in benefit liabilities. The agency expects to be responsible for the entire $46-million shortfall.

The plan ended on January 31, 2009. Participants are subject to the maximum yearly payout limits in effect on April 20, 2008, of $51,750 for a 65-year-old. The agency became trustee of the plan on June 8, 2009.

Dan River was a designer, manufacturer and marketer of home fashions and apparel fabrics such as comforters, bed sheets, and pillowcases. The company filed for Chapter 11 protection on April 20, 2008, in the U.S. Bankruptcy Court in Wilmington, Delaware, and later converted the case to Chapter 7 liquidation.