Federal Pension Insurer Will Pay Benefits at Piccadilly Cafeterias
FOR IMMEDIATE RELEASE
February 09, 2004
The Pension Benefit Guaranty Corporation today announced it is moving to assume responsibility for the pension plan of more than 6,800 workers and retirees of the bankrupt Piccadilly Cafeterias Inc. Based in Baton Rouge, La., Piccadilly operates 145 cafeterias in 15 southern and mid-Atlantic states.
"The PBGC is stepping in because Piccadilly Cafeterias is liquidating in bankruptcy and the asset purchaser will not be assuming the underfunded pension plan," said Executive Director Steven A. Kandarian. "The PBGC will take over payment of retirees' monthly benefit checks without interruption, up to guaranteed federal limits, and will ensure other employees receive benefits when they are eligible to retire."
Piccadilly Cafeterias filed for bankruptcy protection on October 29, 2003. The company also announced it would sell its restaurant operations to a joint venture formed by TruFoods Corp., the operator of Wall Street Deli and Arthur Treacher's Fish and Chips, and H.I.G. Capital, a private venture capital firm. The sale auction date is February 11, with bankruptcy court approval expected on February 13.
The Piccadilly Cafeterias Inc. Pension Plan is 50 percent funded, with $54 million in assets to cover $108 million in benefit promises. Of the $54 million shortfall, the PBGC estimates it will be liable for about $51 million. The plan will end as of February 13, 2004, and the PBGC expects to become trustee soon after that date.
The Piccadilly Cafeterias pension plan was frozen in December 2001, and workers have accrued no new benefits since that date. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2004 is $44,386 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
After the PBGC becomes trustee of the pension plan, the agency will send notification letters to all participants in the Piccadilly Cafeterias plan. After the transfer of plan documents, the agency will review individual records and calculate each person's benefit according to plan provisions, asset allocation rules, and federal guarantee limits. Workers and retirees with questions may consult the PBGC Web site or call toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242. General information about PBGC's pension insurance program is available at www.pbgc.gov.
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 31,000 private-sector defined benefit pension plans.
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PBGC No. 04-27