The PBGC, in a deal reached Thursday, will not appeal a U.S. Bankruptcy Court decision to allow Harry & David Holdings Inc., Medford, Ore., to terminate its pension plan, and will assume responsibility for the plan's funding shortfall.
The PBGC said earlier this week that it would consider appealing a decision by U.S. Bankruptcy Court Judge Mary Walrath in Wilmington, Del., to allow Harry & David to terminate the plan as part of its Chapter 11 bankruptcy reorganization.
“We did our best to work with Harry & David to maintain their plan, but that didn't happen,” Josh Gotbaum, director of the Pension Benefit Guaranty Corp., said in a news release. “PBGC will step in and pay benefits, on time and without missing a beat.”
Under the agreement, Harry & David will pay the PBGC a total of $3.6 million over two years, in addition to a $9.6 million payment for termination premiums over three years, according to the PBGC.
Kay Hong, Harry & David's chief restructuring officer and interim CEO, said in a Harry & David release that it expects the PBGC to provide 99% of plan participants with full benefits.
The PBGC estimates it will pay $32.8 million of the plan's $33.4 million unfunded liability.
