WASHINGTON (AP) -- A federal agency that takes over financially troubled pension plans lost a Supreme Court appeal Tuesday in a dispute over how much money it can collect from bankrupt companies after taking over their plans.
The court, without comment, turned away an appeal by the Pension Benefit Guaranty Corp. Lower courts had reduced the agency's claim against a Colorado steel company whose plan it assumed.The PBGC is designed to protect beneficiaries of pension plans that get into financial difficulty. When the agency takes over a plan, it pays benefits to the beneficiaries and collects unpaid pension fund contributions from the employer.
CF&I Steel Corp., based in Pueblo, Colo., filed for bankruptcy reorganization in 1990 in Utah, where one of its subsidiaries was located. Two years later, the PBGC took over the pension plan and filed claims in bankruptcy court to collect unpaid contributions from the company.
A bankruptcy judge followed a PBGC formula and calculated the amount owed by the steel company for unfunded benefits at $221 million.
A federal judge and the 10th U.S. Circuit Court of Appeals ruled against use of the PBGC's formula, however, and the bankruptcy judge reduced the amount to $123 million.
The appeals court ruled that the PBGC's formula does not apply in bankruptcy cases.