4-6-09: FAQ - PBGC Process

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Updated Tuesday May 24 2011 20:01 EDT
Published Monday April 06 2009 10:40 EDT

Who has to approve the dumping of our pensions to PBGC? Can Delphi do it with no approval by anyone? Or does Delphi simply needs Judge Drain's approval? Or is there a more complex approval process?

Because of the bankruptcy, Delphi has to ask the court for permission to do everything, including dumping the pension plans on the PBGC. They have to file a "plan" of what they intend to do, when they intend to do it, and how much money it's going to cost or save. Remember, the court is ONLY interested in getting Delphi out of bankruptcy.

According to PBGC, if the plan is not fully funded, Delphi will apply for a distress termination if Delphi is in financial distress (that could be debated either way). To do so, however, Delphi must prove to Judge Drain and/or to PBGC that Delphi cannot remain in business unless the plan is terminated. If the application is granted by the PBGC, PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds.

IF Delphi ends the plan , they first have to go to the judge for permission to do so, (like they did to terminate our benefits). We must get this notice, called the Notice of Intent to Terminate, at least 60 days before the "termination" date. If PBGC is terminating the plan, the PBGC notifies Delphi and often publishes a notice about their action in local and national newspapers.

Does the PBGC have power to seize Delphi assets outside the USA to finance the pensions?

It looks like it does, but corporations are formed as complex as possible for a reason. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.

What would be the possible timeline for dumping of pensions to the PBGC?

We don't know.