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Compliance October 13, 2011
PBGC to Fight Friendly’s over Pension Dump
October 13, 2011 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation said it will fight efforts by Friendly's to end the pensions of its almost 6,000 workers and retirees in bankruptcy.
Reported by Rebecca Moore
Based in Wilbraham, Massachusetts, Friendly Ice Cream Corp. filed for bankruptcy protection on October 5. The company also announced it is 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, according to the PBGC announcement.
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.
PBGC Director Josh Gotbaum said the agency works to preserve both businesses and their pensions. Many companies have gone through bankruptcy with their pensions ongoing. Since 2009, PBGC has worked with some 40 companies to preserve the pensions of more than 300,000 Americans, the announcement said.