WASHINGTON (Oct. 25, 2010)—The Pension Benefit Guaranty Corp. has assumed responsibility for the underfunded pension plan of Denman Tire Corp., the second time in the week the PBGC has done that with a bankrupt rubber company.
The PBGC announced Oct. 22 it will take responsibility for the Denman Tire Corp. Pension Plan, which ended March 17, 2010—the day Denman began Chapter 7 liquidation proceedings.
According to the PBGC, the Denman pension plan is only 46-percent funded, with assets of $15.1 million to cover benefit liabilities of $32.7 million. The agency expects to cover $17 million of the $17.6 million shortfall.
Under the provisions of the Pension Protection Act of 2006, the maximum guaranteed annual pension the PBGC can pay is determined by the legal limits in force on the date of the bankruptcy.
Therefore, the more than 600 participants in the Denman plan face a maximum guaranteed annual pension amount of $54,000 for a 65-year-old, the agency said. Those who retire earlier or elect survivor benefits will receive smaller amounts, it said, and certain early retirement benefits or benefit increases made during the five years before the bankruptcy may not be fully funded.
The PBGC said it will notify plan participants within the next several weeks.
Founded in 1919, Leavittsburg, Ohio-based Denman manufactured construction, agriculture and mining tires as well as tires for antique and classic cars. Hit hard by the economic downturn, Denman tried unsuccessfully for over a year to find a buyer before filing for Chapter 7. Titan Tire Corp. ended up with much of the firm's assets.
Three days before the Denman announcement, PBGC said it will take responsibility for the underfunded Chardon Rubber Co. Retirement Plan, covering $12.4 million of a $12.7 million pension shortfall.