Collins & Aikman underfunded pension plan to be assumed by PBGC

By Caroline Salls

Pittsburgh, March 30 - Collins & Aikman Corp.'s underfunded pension plan may be assumed by The Pension Benefit Guaranty Corp., subject to approval by the U.S. Bankruptcy Court for the Eastern District of Michigan, according to a PBGC news release.

According to the release, the plan covers about 21,000 Collins & Aikman employees and retirees.

The PBGC said it is stepping in because the company has missed $7.6 million of required contributions and the pension plan will be abandoned when the company sells all of its assets.

When the PBGC assumes the plan, retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.

According to PBGC estimates, the Collins & Aikman pension plan is 58% funded, with $253 million in assets to cover $434 million in benefit liabilities.

The PBGC said it expects to be liable for about $161 million of the $181 million shortfall, and the agency will take over the assets and use PBGC insurance funds to pay guaranteed benefits earned under the plan, which is scheduled to terminate on March 31.

Under Collins & Aikman's Chapter 11 plan, the company's assets will be liquidated and no asset purchaser will assume the pension plan.

Until the PBGC becomes trustee of the pension plan, the plan will remain ongoing under company sponsorship.

Collins & Aikman, a Troy, Mich.-based automotive company, filed for Chapter 11 on May 17, 2005 in the U.S. Bankruptcy Court for the Eastern District of Michigan. Its case number is 05-55927.

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