Retirees and preretirees at Durham, N.C.-based Reichhold Inc. have cause to be grateful for the Pension Benefit Guaranty Corporation.
That's because the company, which manufactures resins used for composites, plans to sell its assets in bankruptcy and abandon its pension plan. That means that PBGC is stepping into the breach. The Reichhold Inc. Retirement Plan ended as of Oct. 17, 2014.
However, retirees aren't being left in the lurch, thanks to PBGC, nor will future retirees, who can apply for benefits as soon as they are eligible. PBGC will pay all pension benefits earned by the plan's retirees, up to the legal limit of approximately $59,320 a year for a 65-year-old.
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Plan participants, both employees and retirees, will continue to receive benefits from the company until the PBGC assumes responsibility. Current retirees will continue to receive uninterrupted benefits.
The PBGC has estimated that the plan is 70 percent funded. It has $228 million in assets with which to pay benefit liabilities of $325 million, leaving a shortfall of $97 million. The agency expects to cover $90 million of that amount.
Reichhold and three of its affiliates filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del. on Sept. 30. In court papers, the company said that financiers Third Avenue Management, Black Diamond Capital Management, and JPMorgan Chase, which hold Reichhold's senior secured notes, intend to be the lead bidders for Reichhold's assets. An auction, sale hearing and closing are slated for Dec. 19, 2014; Dec. 22, 2014; and January 30, 2015, respectively.
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