PBGC Protects Pensions at Malden Mills
FOR IMMEDIATE RELEASE
June 28, 2007
WASHINGTON - The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering about 1,500 employees and retirees of bankrupt textile maker Malden Mills Industries Inc. The Lawrence, Mass.-based company developed and produced "Polartec", a synthetic material for insulating cold weather apparel.
The PBGC stepped in because Malden Mills, now in liquidation, missed $1.7 million in required pension contributions and the pension plan will be abandoned as a result of the sale of substantially all of the company's assets. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire.
According to PBGC estimates, the Malden Mills Industries Inc. Union Employee's Pension Plan is about 51 percent funded, with some $16 million in assets to cover nearly $31 million in benefit liabilities. The PBGC expects to be liable for $12 million of the $15 million shortfall. The agency will take over the assets and use PBGC insurance funds to pay guaranteed benefits earned under the plan, which terminated on Mar. 30, 2007. Assumption of the plan's unfunded liabilities will have no material effect on the PBGC's financial statements, according to generally accepted accounting principles.
Malden Mills Industries Inc. filed for Chapter 11 bankruptcy protection on Jan. 10, 2007. Sale of substantially all of the company's assets to Chrysalis Capital Partners LP received bankruptcy court approval on Feb. 26, 2007. The sale did not include the pension plan, which was left without a viable sponsor after the transaction closed on Mar. 13, 2007. The bankruptcy proceeding converted to Chapter 7 liquidation on Mar. 30, 2007. Chrysalis affiliate Pipevine MMI has assigned the former Malden Mills assets to Polartec LLC.
Within the next several weeks, the PBGC will send notification letters to all plan participants. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2007 is $49,500 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.
Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov 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.
Retirees of Malden Mills Industries Inc. who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
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 30,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
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PBGC No. 07-28