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#1
11-03-2005, 11:58 AM
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PBGC Gaining Stake in US Companies
The PBGC is being given stock in bankrupted companies that turn their pensions over to them - Northwest just did and Delta is soon to follow. How does it make any sense to securitize future benefits with common stock (that will not be paid out upon bankruptcy)? Am I missing something big about not cashing this stock in on the open market to actually pay benefits?
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"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty or Safety." "Women are so lucky. They never have to worry about getting a guy pregnant." - Rawl316 
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#2
11-03-2005, 12:08 PM
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It is typical for creditors to get stock in the reformed company after bankruptcy. In this case the PBGC has a claim against the cos and will get stock as part of the bankruptcy deal. Presumably this will go into the PBGC protfolio which could later be sold on the open market after the re-org.
__________________
Baseball is life; the rest is just details.
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#3
11-03-2005, 02:45 PM
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As I understand the process, there is no conflict of interest with regard to valuation of the pension obligations. The reason is that said pension obligations have been dumped on the PBGC and no longer have any impact on the bankrupt company's worth.
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