PBGC said it has made numerous efforts to engage German-owned Bendix on the matter, and a lawsuit is the next step.
The Pension Benefit Guaranty Corporation, PBGC, is suing Bendix Commercial Vehicle Systems for $16.6 million to cover pension debt from the closing of its Frankfort, Kentucky plant. Federal law requires companies to provide financial protection when more than 20% of a pension plan’s members lose their jobs in a shutdown.
All of Bendix’s Frankfort plant workers were jobless after it closed in December 2007. Bendix moved its braking system compressor operation to Acuña, Mexico. Bendix only notified the agency about the plant closure on 30 January 2008.
Bendix supplies brakes and vehicle control systems for trucks and commercial vehicles and is headquartered in Elyria, Ohio, but owned by Knorr-Bremse AG of Munich, Germany.
The action against German-owned Bendix is the first time PBGC has had to go to court to compel a company to cover pension obligations from a plant closing.
“Bendix continues to ignore its legal responsibility to these workers,” said PBGC Director Josh Gotbaum. “We’ve tried to work with them in good faith, but now we have no choice except to take them to court. Make no mistake: PBGC will use every legal means to protect pensions.”
Bendix said it would respond next week to requests for comment and clarification from AutoInformed.(editor’s note: Bendix subsequently ignored repeated requests for its view.)
PBGC – which protects the financial viability of U.S. pensions for more than 44 million U.S. workers – filed its lawsuit in the US District Court in Cleveland last month after Bendix allegedly declined to meet its obligations.
PBGC said that up to now, companies that closed plants have worked with PBGC to settle their pension debts. Since 2007, PBGC has obtained more than $1 billion in additional protection for pension plans covering more than 120,000 workers and retirees.
