PBGC denies bankruptcy interference

By BenefitsPro

By Dan Berman

The Pension Benefits Guaranty Corp. has denied reports that its actions caused Hardwick Clothes to file for bankruptcy.

“Recent press reports suggest that our actions pushed Hardwick into bankruptcy,” said Sanford Rich, the PBGC’s chief of negotiations and restructuring, in a statement. “This isn't true. We provide a safety net for the country's privately run pensions, and we provided that service to Hardwick.”

Hardwick, the nation’s oldest privately owned clothing manufacturer, said it filed for Chapter 11 bankruptcy this month because the PBGC had demanded it replenish its underfunded pension system by paying $7.3 million. If it failed to do so, the PBGC had threatened to place a lien against the company.

The company said the lien would have sent the company under and filing to reorganize was its only option. The PBGC said the lien would have been for $2.3 million, but was never put in place.

In July, the agency agreed to take over the pension fund that covers about 600 employees and retirees. That action came, the PBGC said, after the company had asked it for help with its distressed retirement plan, which cover about 600 people.

The PBGC said its estimates showed the company’s pension fund had about $10.8 million to pay $15.4 million in benefits.

The PBGC, which is the insurance agency for private pension plans, agreed that it had threatened to file the lien, but said Hardwick, based in Cleveland, Tenn., had not responded before it filed for bankruptcy.

Hardwick, which was founded 133 years ago, makes tailor-made sports jackets and blazers.

Originally published on BenefitsPro.com