A federal judge yesterday ordered Dallas-based LTV Corp. to take back responsibility for more than $2 billion in pension liabilities it had shed after filing for bankruptcy protection four years ago.
U.S. District Judge Robert Sweet in New York ordered the company to reassume the obligations for three terminated retirement plans from the Pension Benefit Guaranty Corp. (PBGC). That agency, which insures private pension funds, was forced to take over the liabilities of the three funds after they were terminated by LTV following the bankruptcy filing.
In ordering LTV to take back the funds, Sweet was complying with a U.S. Supreme Court ruling last June that found PBGC had the power to order companies to reinstate terminated pension plans. PBGC had ordered the company to take back the plans in 1987 after LTV had undergone a dramatic financial turnaround.
"With today's order," PBGC Executive Director James B. Lockhart said, "LTV can now take the necessary steps to complete its bankruptcy reorganization and emerge as a viable company while workers and retirees can have their full pensions as originally promised."
LTV, a steel manufacturer and defense contractor, has repeatedly argued it cannot afford to take back the three plans and that, if forced to do so, it will immediately terminate one of them, the pension plan for hourly workers at its steel subsidiary. Sweet said under the Supreme Court order, all three funds had to be restored.
Chuck Palmer, a spokesman for LTV, said the company had not made a decision whether to terminate any of the three plans. But Palmer said the repayment schedule proposed by PBGC "was not a workable solution."
Sweet acknowledged his ruling could affect LTV's efforts to reorganize under bankruptcy and suggested the two sides consider submitting to arbitration any dispute over how the pension plans should be paid.