The Pension Benefit Guaranty Corp. announced that it has taken over two pension funds covering nearly 2,300 workers and retirees of furniture maker Falcon Products Inc. and its subsidiary Shelby Williams Industries Inc.
Falcon and Shelby, along with seven other subsidiaries of Falcon, filed for bankruptcy protection in January. This summer they sought the approval of the PBGC and the bankruptcy court to terminate the plans.
According to the agency, The Falcon Products Inc. Retirement Plan and the Shelby Williams Industries Inc. Employees Pension Plan together are 44 percent funded, with about $26 million in assets to cover nearly $59 million in promised benefits. The PBGC estimates that it will be responsible for $31.6 million of the $33 million shortfall.
A third pension plan, which covers just 70 employees and retirees of another Falcon Products subsidiary, Sellers & Josephson Inc., will remain ongoing pending the PBGC’s appeal of the bankruptcy court’s decision. According to the agency, the court erred by finding that Falcon Products and the other failing companies could not afford the three plans together, rather than considering each plan separately.
The bailout will no doubt renew debates over whether taxpayers should bail out failing pension funds. Last week, the Senate passed what the Associated Press called “a far-reaching pension overhaul bill.” The House is soon expected to vote on its own bill, the wire service added.