Hawker Beechcraft Inc., Wichita, Kan., filed for Chapter 11 bankruptcy protection Thursday, but the firm's three pension plans with a combined $769 million in assets are not expected to be immediately affected, according to a restructuring fact sheet on the company's website.
However, “There is a possibility that as part of the Chapter 11 process and in order to obtain financing to exit the bankruptcy, Hawker Beechcraft may be required to terminate its pension plan,” which would then be taken over by the Pension Benefit Guaranty Corp., according to the fact sheet.
The pension plans are a combined 56% funded with $1.4 billion in benefit obligations. If the plans were terminated, the PBGC would pay $533 million of the $611 million shortfall.
“We are committed to working with Hawker Beechcraft and its creditors so that the company can reorganize successfully, while also maintaining the retirement security of its nearly 20,000 workers and retirees,” said J. Jioni Palmer, PBGC director of communications, in an agency news release.
Hawker Beechcraft filed in the U.S. Bankruptcy Court for the Southern District of New York. It reached an agreement with a “significant number of its senior secured lenders and senior bondholders on the terms of a financial restructuring plan that will strengthen the company for the future and eliminate approximately $2.5 billion in debt and approximately $125 million of annual cash interest expense,” according to a release from the firm.
