PBGC Says That's Not What Was Agreed Upon

The semi-government corporation that guarantees pensions has thrown a wrench into United Airline's attempts to exit from bankruptcy court, objecting to the company's plan to dump its employee pensions. The Pension Board Guarantee Corporation says what's now before the court in United's reorganization documents isn't what was agreed upon in negotiations earlier this year.

The PBGC filed a protest in Chicago federal court on Thursday, saying the latest UAL disclosure statement includes details that are "unconfirmable," according to a report from the Reuters.

To find out the exact beef, you have do dig down into the details of an agreement between the PBGC and United reached last Spring. Under the plan, the government would receive $1.5 billion in UAL notes and stock that the government would be able to use to fund the pensions UAL won't fund.

But now, according to the PBGC filing, United has placed restrictions on the conversion of those notes and stocks and the quasi-government agency says, in essence, that dog won't hunt.

"The sale restriction conflicts with the clear and unambiguous terms of the PBGC settlement," the PBGC said, quoted by Reuters.

United seemed to take a subdued approach in its response to the PBGC filing.

"We expect to resolve any issues and concerns so that the court can approve our disclosure statement next week and we can continue moving toward exit from bankruptcy," spokeswoman Jean Medina told Reuters.

United has been mired in bankruptcy for almost three years now and isn't set to exit court protection until early next year. Cutting loose $10 million worth of underfunded pensions is a big part of the airline's plan to right itself and leave bankruptcy behind. The underfunded pensions cover 120,000 employees who, according to the PBGC plan, would receive approximately $6.6 billion.

FMI: www.united.com