PBGC Early Warning Protects Two Pension Plans Covering 13,000
FOR IMMEDIATE RELEASE
July 31, 1997
The pension benefits of nearly 13,000 workers and retirees will be protected as Samsonite Corporation agrees to assume the underfunded pension plans of McCrory Corporation and Schenley Industries, Inc., the outcome of an earlier agreement negotiated by the Pension Benefit Guaranty Corporation (PBGC) as part of the PBGC Early Warning Program.
"With early warning, PBGC can assure companies take the necessary action to protect workers' pensions. The result is a success story for workers, retirees, companies and the PBGC," said David M. Strauss, PBGC Executive Director.
In 1993, PBGC negotiated the agreement to protect the plans in a bankruptcy reorganization of the Samsonite corporate predecessor. The agreement was a condition for PBGC's approval of the change in corporate structure which, as originally proposed, would have removed the responsibility for underfunding from the predecessor corporation.
Under the agreement, McCrory retained primary responsibility for the two pension plans. If McCrory failed to meet this responsibility, Samsonite would assume the pension liability. Samsonite has agreed to assume the Schenley plan as a result of McCrory's failure to make the required pension contributions.
McCrory is in bankruptcy proceedings and a hearing is scheduled for July 31 on a proposed sale of assets; Samsonite has agreed to assume the McCrory pension plan subject to court approval.
According to PBGC estimates, the McCrory plan is underfunded by $25 million, with assets of $43 million and liabilities of $68 million. It has nearly 11,000 participants. The Schenley plan is underfunded by about $19 million, with assets of $29 million and liabilities of $48 million. It has approximately 2,000 participants.
Under PBGC's Early Warning Program, the agency monitors some 500 companies with underfunded pension plans and negotiates agreements when transactions or restructurings occur to ensure that workers' pensions are protected.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 42 million American workers and retirees participating in about 50,000 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 investment returns.
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PBGC No. 97-38