The PBGC is fighting a move by Harry & David Holdings Inc., Medford, Ore., to terminate its underfunded pension plan for 2,700 workers and retirees as it goes through bankruptcy proceedings.
“Many companies have gone through bankruptcy with their pensions intact, and we think Harry & David might be one of them,” said Joshua Gotbaum, director of the Pension Benefit Guaranty Corp., in a news release Tuesday. “PBGC doesn't ask a company to risk its business if it can't afford its pension plan.”
When Harry & David filed for Chapter 11 bankruptcy protection in March, it presented a creditors' agreement that required the company to cancel its pension plan, which is underfunded by $23.6 million. If permitted to do so, the PBGC said in the release that it would have to assume $45 million in payments, and some retirees would get reduced pensions. A bankruptcy court hearing is scheduled for July 22 in Wilmington, Del.
After a financial analysis of the company, PBGC executives believe it can get through bankruptcy without terminating workers' pensions “We'd just like to make sure that their employees and retirees share” in the success of the company when it comes out of bankruptcy, Mr. Gotbaum said in the release.