WASHINGTON–The Pension Benefit Guaranty Corporation, which protects American pensions, will fight efforts by Friendly's to end the pensions of its almost 6,000 workers and retirees in bankruptcy.
Based in Wilbraham, Mass., Friendly Ice Cream Corp. filed for bankruptcy protection on Oct. 5. The company also announced it was closing 63 restaurants. Friendly's is owned by Sun Capital Partners. Sun Capital intends to use the bankruptcy process to abandon the pension plan, but keep its ownership of Friendly's.
"It looks like Friendly's and Sun Capital are trying to make their employees and retirees bear the brunt of the company's restructuring; the employees deserve better," said PBGC Director Josh Gotbaum.
If the bankruptcy court allows Friendly's and its owners to abandon the pension plan, PBGC will pay pension benefits to Friendly's employees. However, because of limits set by federal law, retirees might get reduced pensions.
Gotbaum said PBGC works to preserve both businesses and their pensions. Many companies have gone through bankruptcy with their pensions ongoing. In fact since 2009, PBGC has worked with some 40 companies to preserve the pensions of more than 300,000 Americans.
"Time after time, PBGC has worked successfully with companies and their creditors to make sure that the bankruptcy process recognizes the rights of pensioners, too," Gotbaum said. "We want to make sure that Friendly's employees and retirees don't get left out."
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.