After Lengthy Court Battle, PBGC Secures $39.5M Settlement from Former Metaldyne Parent Company
FOR IMMEDIATE RELEASE
November 04, 2014
WASHINGTON — The Pension Benefit Guaranty Corporation and Asahi Tec Corp., a Japanese metal casting and forging company, have agreed to settle their four-year legal dispute over the pension liabilities of the Metaldyne Corp., a former Asahi Tec subsidiary that went into bankruptcy in 2009. In the settlement, Asahi Tec agreed to pay PBGC $39.5 million.
Asahi Tec, of Shizuoka, Japan, purchased Metaldyne, a manufacturer of powertrain and chassis systems based in Plymouth, Mich., in 2007 for $1.2 billion. When Metaldyne went bankrupt in 2009, PBGC asked Asahi Tec to assume the pensions of Metaldyne's 10,000 workers and retirees and, after the pension plan terminated, to pay its liabilities totaling nearly $200 million.
This sparked a protracted legal battle over whether American courts had jurisdiction over a company with no ongoing business in the U.S.
In October 2013, PBGC received a favorable decision from the U.S. District Court in Washington, D.C., ruling that the court had jurisdiction over Asahi Tec and that the company was liable for the unfunded benefits and termination premiums of its bankrupt former subsidiary.
PBGC and Asahi Tec agreed to settle the matter without Asahi Tec admitting to any liability or jurisdiction.
"We are pleased that PBGC and Asahi Tec have come to terms that resolve years of past and future litigation over Metaldyne's pension obligations," said Sanford Rich, PBGC's Chief of Negotiations and Restructuring. "We believe that this case affirms that foreign companies are responsible for the pension obligations of American companies they acquire. We will continue to press this issue when appropriate."
PBGC protects the pension benefits of more than 42 million Americans in 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, investment income, and with assets and recoveries from failed plans. Learn more at PBGC.gov
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PBGC No. 14-14