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PBGC – Plan Sponsor Pilot Mediation Project

PBGC – Plan Sponsor Pilot Mediation Project

In response to business community comments and concerns, PBGC is beginning a pilot program that will offer mediation to plan sponsors to facilitate resolution of negotiations in two key PBGC program areas. PBGC will offer mediation to ongoing plan sponsors as part of its Early Warning and Risk Mitigation Program and to former plan sponsors as part of resolving their pension liabilities following termination of underfunded pension plans. 

Mediation enables parties to resolve disputes with the assistance of a skilled, neutral and independent dispute resolution professional, while maintaining control of the process and its outcome. The 2016 Report on Significant Developments in Federal Alternative Dispute Resolution shows how federal agencies can incorporate mediation to save time and cost for both the government and private parties, along with improving stakeholder relations.

It is PBGC’s practice to resolve Early Warning and termination liability settlements on a consensual basis with plan sponsors without the need for litigation. Our teams of experienced professionals are committed to achieving settlements that are affordable for each plan sponsor. 

Goals

PBGC’s goals for the Mediation Pilot are:

  • To resolve disputes early
  • To promote improved relations with stakeholders
  • To reduce the costs of protracted negotiations and other proceedings
  • To make alternative dispute resolution an integral part of the agency’s dispute resolution process

 

Eligibility

Mediation will be offered to eligible respondents and proceed purely on a voluntary basis. Only cases selected from among the Termination Liability Collection and the Early Warning Programs will be eligible for inclusion in the Pilot. Generally, cases will not be eligible where one of the following applies:

  • The plan sponsor has a minimal ability to pay;
  • There is a court proceeding pending; or
  • There is limited time to act and the plan sponsor has declined to sign a standstill or tolling agreement

Timing

In eligible Termination Liability cases, respondents have 120 days to satisfy their disclosure requirements under 29 CFR 4062.6. After that, PBGC will review, verify and analyze the information, and the parties may then engage in good faith negotiations. PBGC will make mediation available within a reasonable time after we complete our review and analysis of the information.

In eligible Early Warning engagements, companies will be advised of the availability of mediation at the outset of negotiation. Mediation shall be available after PBGC receives sufficient responses to its information requests, but the timing of the transaction at issue will determine the window for mediation. Mediation must be completed before the date of the closing, with sufficient time left for the parties to document the mediated resolution or take legal action, if warranted.

Mediators

Mediators will be obtained from the Federal Mediation and Conciliation Service (FMCS) through an interagency agreement. The parties to a mediation shall split the costs to prevent any appearance of partiality.

Participants

PBGC subject matter experts will be trained in mediation practice. Members of PBGC’s case teams will participate in the mediation of their case. Plan sponsors are entitled to participate in the mediation along with or through the representatives of their choice.

Duration and Evaluation

PBGC expects this pilot to last for one year. At the end of the year, PBGC will evaluate the pilot’s success according to the following metrics, and include plan sponsor feedback as part of the evaluation.

  • Percent of screened cases found eligible to participate
  • Percent of eligible cases opting for mediation
  • Resolution rate – impact on case inventory
  • Time to resolution
  • Costs savings vs. litigation or protracted negotiations
  • Outside stakeholder reaction to Pilot – impact on stakeholder relationships
     

For more information on the Mediation Pilot program, contact the Corporate Finance & Restructuring Department (CFRD) at 202-326-4070.

Last updated October 31, 2017