Visteon files reorganization plan; PBGC eyes pension plan retention

By Caroline Salls

Pittsburgh, Dec. 18 - Visteon Corp. filed its plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the District of Delaware.

Under the plan, term loan lenders will receive new common stock in the reorganized company and a new senior secured loan in exchange for their claims.

In addition, the plan calls for termination of Visteon's pension plans. As a result, the Pension Benefit Guaranty Corp. (PBGC) will receive the new common stock remaining after the term lenders' claims are satisfied.

PBGC acting director Vince Snowbarger said in a news release that his agency would like to see Visteon strike a deal to retain all of its pension plans.

"Under Visteon's plan of reorganization, the company proposes to transfer to the PBGC three of its pension plans, which cover more than 21,000 workers and retirees, and which have an aggregate shortfall of $544 million," Snowbarger said in the release.

"When pension plans terminate, many retirees lose hard-earned benefits because of limits set by federal law.

"The PBGC estimates that workers and retirees in the three Visteon plans would lose almost $100 million in benefits, with early retirees most likely to see benefit reductions. Continuation of the pension plans would preserve those benefits."

General unsecured creditors will receive no distribution under the plan.

Creditor treatment

Creditor treatment will include:

• Holders of administrative and professional claims, debtor-in-possession facility claims, priority tax claims, ABL claims, secured tax claims, other secured claims and other priority claims will recover 100% in cash;

• Holders of term loan facility claims will recover 100% through a new senior secured loan and 96.2% of new common stock;

• The PBGC will recover 12% through 3.8% of the new Visteon common stock;

• Holders of general unsecured claims and Section 510(b) claims will receive no distribution;

• Holders of intercompany claims and intercompany interests will recover nothing, but their claims and interests may be reinstated; and

• Interests in Visteon will be cancelled.

Visteon, a Van Buren Township, Mich., global automotive supplier, filed for bankruptcy on May 28, 2009. Its Chapter 11 case number is 09-11786.

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