The PBGC is seeking to add 11 more defendants to a lawsuit that claims fiduciaries of the Toms Foods Inc. Pension Plan, Columbus, Ga., unlawfully invested millions of dollars in the now-defunct sponsor companys bonds.
The plan terminated in 2007, resulting in a claim of $45 million against the Pension Benefit Guaranty Corp., according to a PBGC news release.
The lawsuit, originally filed by plan participants in U.S. District Court in Columbus, Ga., claims plan fiduciaries directed the investment of $4 million in plan assets to junk bonds issued by Toms Foods, knowing that the company would likely default on the bonds.
The company defaulted on the bonds in November 2004 and entered Chapter 11 bankruptcy in April 2005. Bondholders and the pension plan recovered 22 cents on the dollar, with the pension plan receiving a total distribution of $873,653.
The original lawsuit names as defendants Rolland Divin, former Toms Foods CEO and chairman of the pension plans investment committee; Michael E. Heisley, the companys former chairman; and Andrew G.C. Sage II, a former member of the board of directors.