Hawker Beechcraft pension deals pending with bankruptcy judge
01/18/2013 12:02 AM
08/08/2014 10:14 AM
A U.S. bankruptcy judge reserved judgment Thursday in a hearing regarding the future of Hawker Beechcraft’s three pension plans.
A settlement has been reached with an ad hoc retiree committee of salaried employees, the company said.
The small group opposed the Pension Benefit Guaranty Corp.’s takeover of its plan, saying their benefits would be substantially reduced if the judge approved the takeover.
That’s because they receive benefits that are above the PBGC’s caps on how much a retiree can collect in a year.
Details of the settlement are expected to be available as early as Friday.
The ad hoc committee is made up of nine or 10 retirees. But the settlement covers about 70 former salaried employees whose benefits would be reduced under PBGC caps, the company said.
Other groups of retirees’ monthly benefits wouldn’t be reduced by the change because their benefits fall below the caps.
Hawker Beechcraft has asked the court to terminate the salaried and base retirement income plan and for the PBGC, rather than the company, to pay benefits to vested participants.
Hourly workers represented by the Machinists union reached agreement with the company regarding their retirement income plan earlier in the process.
Under the agreement, accruals were to be frozen at the end of 2012, and a new Retirement Income Savings Plan was to be created and continue to operate after Hawker Beechcraft emerges from bankruptcy, which the company expects to do in late February.
The company filed for Chapter 11 bankruptcy May 3.
The judge, Stuart Bernstein, plans to rule on the pensions in a hearing next week, the company said.
Bernstein wanted to make sure retirees in the ad hoc group knew the details of the settlement and had time to file an objection if desired before he ruled, the company said.
“Judge Bernstein gave no indication that he did not support the proposed global settlement between the Company, the PBGC and the IAM (the Machinists),” Nicole Alexander, a Hawker Beechcraft spokeswoman, said in an e-mailed statement. “He declined to rule today because he wanted the Company to provide notice of the additional proposed settlement with the Ad Hoc Retiree Committee to other affected Salaried Plan participants and provide an opportunity for those parties to respond by the time of our next hearing on Jan. 24, 2013.”
In its court filing, members of the retiree group opposed what it called unequal treatment for the company’s salaried and hourly retirees.
The group noted that Hawker Beechcraft is not seeking to terminate the retirement income plan for hourly workers represented by the union, while seeking termination of two plans for salaried employees.
“Since the debtors (Hawker Beechcraft) are preserving the hourly plan, they are not permitted to terminate the salaried plan,” the group argued in the filing.
The PBGC is a federal agency that administers pension plans for companies that cannot meet their financial obligations to retirees. The agency pays the benefits, but with caps, when an employer is no longer able to pay.
The agency and Hawker Beechcraft agreed in principle in August for the PBGC to take over administration of the two plans, subject to court approval.
If the plans are terminated, the agency assumes the assets and liabilities, takes over as the trustee and pays the benefits.
Hawker Beechcraft’s three pension plans have $769 million in assets to cover $1.4 billion in anticipated obligations, the company has said in prior filings.