US pension fund fail 07312009

“The Pension Benefit Guaranty Corporation (PBGC) today announced it will take responsibility for the underfunded pension plan covering about 10,770 workers and retirees of Metaldyne Corp., an auto parts supplier based in Plymouth, Mich.

The agency’s 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. If the PBGC 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.

On May 27, 2009, Metaldyne and 30 of its U.S. subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court in Manhattan. The company is a global manufacturer of highly engineered metal components for automobile makers such as Ford Motor Co., General Motors Co., and Chrysler Group LLC.

The Metaldyne Corporation Pension Plan is about 53 percent funded, with assets of $177 million to cover benefit liabilities of $334 million, according to PBGC estimates. The agency expects to be responsible for $153 million of the $157 million shortfall.”

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