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Pension Insurer Takes over 4 Enron Retirement Plans
The Baltimore Sun, June 4, 2004
The federal government's pension insurer acted yesterday to protect participants in four under-financed Enron Corp. retirement plans.
The Pension Benefit Guaranty Corp., in a procedural move, filed a notice to terminate four of Enron's pension plans and to take them over as trustee.
That means the agency is activating its claim on Enron assets to cover the shortfall in the pension plans. Otherwise, those funds would flow to Enron creditors under a reorganization plan under consideration by the U.S. Bankruptcy Court in New York.
"Acting now preserves assets that Enron can use to pay a private insurance company to take over its pension plans, which would provide full benefits and preserve the option to receive lump-sum payments," said Bradley D. Belt, the agency's executive director.
The move coincided with a scheduled confirmation hearing in New York over Enron's plan for reorganization.
Enron's reorganization plan is inadequate for maintaining the pension plans or placing the obligations with a private sector insurance company, the federal agency said.
Under the proposed reorganization scheme before the bankruptcy court, the plans would be left with a liquidating trust that pays out all of its assets to other creditors. The pension agency said its ability to recover retirement funds would be "severely impaired."
"We know there are sufficient assets to settle the pension obligations in a way that preserves full benefits, and we need to act to ensure that those assets do not go out the door," Belt said.
The four plans have about 17,000 participants.
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