The agency stepped in on behalf of more than 650 current and future retirees of Allied Systems Holdings Inc. because the company is selling the majority of its assets in bankruptcy proceedings. Potential buyers have not agreed to continue the company’s three single-employer pension plans.
Allied Systems and its affiliate, Allied Systems Ltd., were placed into Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Delaware by its creditors in May 2012 through an involuntary bankruptcy filing. The company and Allied Systems Ltd. later converted the case to voluntary bankruptcy and placed 17 of its affiliates in Chapter 11 in the same court. In the past few months, Allied Systems has said it plans to sell the majority of its assets in bankruptcy court.
The PBGC will pay all pension benefits earned by Allied Systems retirees up to the legal limit of about $57,500 for a 65-year-old. Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
According to PBGC estimates, Allied Systems plans are collectively 58 percent funded with $45 million in assets to pay $78 million in benefits. The agency expects to cover the entire $33 million shortfall.