The PBGC has filed papers with U.S. Bankruptcy Court in New York, which is conducting hearings on Enron Corp.'s reorganization plan, to keep the company from using its Chapter 11 proposal to get out of pension liability lawsuits. The agency claims Enron has failed to provide adequate money for its four underfunded pension funds in its Chapter 11 proposal.
Enron claims it should be released from pension liability because its subsidiaries aren't being dissolved but are slated for a "supervised divestiture" once the plan is confirmed. Standards for getting releases from liability are tougher in Chapter 11 cases where companies and their units are being liquidated than in cases where reorganization is the goal.
By closing the pension plans and paying benefits now, the PBGC hopes to keep money for the pension plans that are targeted for termination from being given to other Enron creditors.
Karen Denne, Enron spokeswoman, did not return calls by press time for comment.
