PBGC Protects Coudert Brothers Pension Plan
FOR IMMEDIATE RELEASE
July 12, 2007
WASHINGTON- The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering about 460 employees and retirees of Coudert Brothers LLP, New York. Founded in 1853, the bankrupt law firm once featured an international practice with 28 offices in 15 countries.
The PBGC stepped in because Coudert Brothers, which is now liquidating, missed $2.2 million in required pension contributions and the pension plan will be abandoned as a result of the firma's dissolution. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they reach retirement age.
According to PBGC estimates, Coudert Brothers LLP Employees Pension Plan is about 66 percent funded, with some $17 million in assets to cover about $26 million in benefit liabilities. The agency expects to be liable for $8.5 million of the $9 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 Dec. 31, 2006. The PBGC became trustee of the plan on June 19, 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.
Coudert Brothers filed for Chapter 11 protection in the U.S. Bankruptcy Court in Manhattan on Sept. 22, 2006. The filing came a year after the firm lost two lawsuits, including a $2.5 million malpractice suit filed by a former client, Portfolio Media. Coudert Brothers voted to dissolve its partnership and discontinue its practice in August 2005, after a planned merger with global law firm Baker & McKenzie fell through.
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 2006 is $47,659.08 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 Coudert Brothers 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. 07-30