Reader's Digest Association's Chapter 11 bankruptcy reorganization plan was approved by U.S. Bankruptcy Court in White Plains, N.Y., after a trustee for its U.K. pension plan dropped its objection to the plan.
The British pension trustee withdrew its objection after wording was included that preserves the right of the trustee to contest the discharge of its claims against Reader's Digest, according to William Adler, Reader's Digest spokesman.
The reorganization plan now states that Reader's Digest executives do not think the company has any pension plan liability but the U.K. pension plan trustee does because the fund is “severely underfunded.” The proposed reorganization plan now states that as of March 31, the pension plan was $181.9 million unfunded, from $104.3 million on June 30, 2008, and that the deficit has increased even further since March, and U.K. regulators are investigating whether to seek contributions from Reader's Digest.
U.S. Bankruptcy Court Judge Robert Drain approved a “disclosure statement,” which provides creditors with details of the company’s plan of reorganization under Chapter 11. Creditors will now vote on whether to approve the plan.
