Bankruptcy Court Rules Against Harry & David Pensioners
FOR IMMEDIATE RELEASE
August 08, 2011
WASHINGTON—Harry & David Holdings Inc. today received permission to terminate the pensions of more than 2,700 workers. Under a ruling issued by U.S. Bankruptcy Court Judge Mary Walrath, the Oregon-based gift basket maker can terminate its plan when it emerges from bankruptcy. The decision comes in spite of the efforts of the Pension Benefit Guaranty Corporation, which opposes Harry & David's move to end its pension plan and transfer it to PBGC.
"PBGC's mission is to protect pensions, and we've fought hard to get Harry & David to keep their pensions going," said PBGC Director Josh Gotbaum. "Unfortunately, they decided not to, and the judge supported them."
Harry & David claimed it needed to terminate its pension plan because its investors, the private equity firm Wasserstein Partners LP, are unwilling to finance the pensions. PBGC told the court that the company could afford to keep the plan, and that the termination was being undertaken largely to increase investor returns, not out of necessity to emerge from bankruptcy.
If Harry & David's pension plan ends, PBGC will assume responsibility and pay benefits up to the legal limits set by Congress. PBGC said it would review the judge's decision and decide whether or not to appeal.
The PBGC protects the pension benefits of 44 million Americans in 27,500 private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums and with assets and recoveries from failed plans.
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PBGC No. 11-51