News Column

Fitch Publishes Special Report 'Pension Liabilities in Bankruptcy'

September 3, 2014



NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has published a special report 'Pension Liabilities in Bankruptcy.' In this special report, Fitch conducted extensive and in-depth research on what type of impacts pension liabilities have on other creditors' recovery prospects. The report is supplemented with case studies of recent major bankruptcies that included pension liability claims. Fitch reached the following key findings.

-- Industries such as automotive, aerospace and defense, telecommunications, technology and financial services account for the lion's share of pension sponsorship among the 50 largest sponsors, and the general funded status among the largest 100 sponsors is around 85%.

-- The decision to terminate or assume a pension plan during bankruptcy is hinged on a multiparty negotiation process, which is determined by a set of factors ranging from expediency of bankruptcy to the general goal of restructuring.

-- The unsecured claim amount asserted by the Pension Benefit Guaranty Corporation (PBGC) is usually much larger than the debtor's asserted amount. Larger PBGC claims can overwhelm the recovery rates of unsecured claims and give the PBGC substantial leverage in negotiating and confirming plans of reorganization and court-supervised asset sales.

-- The PBGC tax liens, especially attached to non-bankruptcy entities and facilitated by the controlled group liability doctrine, can force secured and unsecured creditors to give concessions to the PBGC in order to entice it to release the liens.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Pension Liabilities in Bankruptcy

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=761527

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

John Shen-Sampas, +1 212-612-7881

Director, U.S. Corporates

John.shensampas@fitchratings.com

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Sharon Bonelli, +1 212-908-0581

Managing Director, U.S. Corporates

Sharon.bonelli@fitchratings.com

or

Media Relations:

Brian Bertsch, +1 212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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