A settlement has been reached between the Pension Benefit Guarantee Corporation and Bendix Commercial Vehicle Systems LLC, finalizing a $16.6 million Federal lawsuit over pension debt related to a plant closure in 2007.
Bendix, a supplier of air brake and filtration systems to the heavy-duty commercial vehicle industry, closed its Frankfort, Ky. plant in December of 2007, displacing 63 employees.
PBGC filed a Federal suit in Cleveland on Sept. 16, 2011, claiming that the company was not following up on its pension obligations - suggesting that Federal law calls for company liability when more than 20 percent of a pension plan's members lose their jobs in a shutdown.
Since the closure of the plant, Bendix had made $8.2 million in extra contributions to the pension plan, helping to at least partially increase its funding status.
In a statement, PBGC director J. Jioni Palmer says the settlement typifies the federal agency's new and more proactive stance on similar cases.
"Plan sponsors have for years asked us to pay attention to whether company actions really put their pensions at risk, and now we're doing so," Palmer said. "When companies show the commitment and ability to protect their workers and retirees, we are now working with thiem to recognize that."
In the settlement, PBGC won't require Bendix to put up collateral for the additional $8.4 million in pension liability, if the company demonstrates a strong financial record through the end of 2012.
If the company does face financial problems, the settlement calls for Bendix to provide a letter of credit for the full amount.
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