A federal agency has stepped in to pay almost all of a $36 million shortfall in pension benefits for current and future retirees of Vertellus Specialties Inc., an Indianapolis-based manufacturer that is working its way through a Chapter 11 bankruptcy.
The Pension Benefit Guaranty Corp. said in a written statement that it would "pay all pension benefits earned by the plan’s retirees up to the legal limit of $60,136 a year 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.”
The PBGC is an independent U.S. government agency that protects retirement benefits in private-sector defined benefit plans. The agency steps in when a plan ends without enough money to pay all the benefits due its participants.
Earlier this month, Vertellus’ creditors—a group that calls itself Valencia Bidco LLC—bought the company for $454 million. The deal took the form of a credit bid, in which the lenders canceled Vertellus’ debt.
The sale was approved in U.S. Bankruptcy Court in Delaware on Sept. 7. But the purchaser did not continue Vertellus’ pension plan, which ended on Sept. 6, according to a news release issued by the PBGC.
IBJ was unable to reach either PBGC or Vertellus Monday morning for more details. According to the PBGC, the Vertellus plan was 59 percent funded, with $52.4 million in assets and $88.4 million in benefits liability. The PBGC is expected to cover $35.8 million of that $36 million shortfall.
Last year, the PBGC paid monthly retirement benefits to nearly 846,000 people in 4,800 pension plans. The agency is responsible for current and future pensions of about 1.5 million people.
The agency’s money comes from a variety of sources, including insurance premiums paid by participating companies, investments, pension plan assets and recoveries. The agency does not receive tax funding.
Vertellus produces specialty chemicals for a variety of uses, including agriculture, nutritional, pharmaceutical, medical and personal care.
Vertellus’ largest facility is its South Tibbs Avenue plant, which at the time of the company’s bankruptcy filing employed about 240 workers. The company also has operations elsewhere in the United States as well as Europe and Asia.
Vertellus filed for Chapter 11 bankruptcy protection in February.