PBGC will pay retirement benefits for more than 4,400 current and future retirees of Constar Inc., a plastic container manufacturer based in Trevose, Pa. just outside Philadelphia.
The agency stepped in because the company is selling the majority of its assets in bankruptcy proceedings and the buyer isn't assuming responsibility for the pension plan.
PBGC will pay all pension benefits earned by Constar's retirees up to the legal limit of about $59,320 for a 65-year-old.
Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
According to PBGC estimates, the Constar Inc. Pension Plan is 66 percent funded with $89.6 million in assets to pay $135 million in benefits. The agency expects to cover $44.7 million of the $45.4 million shortfall.
After losing Pepsi, the company's largest customer, Constar and its affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., on Dec. 19, 2013. The company intends to sell the majority of its assets in two separate auctions — one for its domestic assets, and the other for the assets or stock of its affiliates in the United Kingdom and Holland.
The lead bidder is Amcor Rigid Plastics USA, Inc., and the auctions are scheduled for Feb. 6. The sales hearing is scheduled for Feb. 10.
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