Teamsters: Con-way responsible for CF pensions
Con-way Inc. said in a regulatory filing on Friday that it has filed a lawsuit contesting a demand from the Central States multi-employer pension fund for $662 million in unfunded pension liability related to the closure of Consolidated Freightways Corp. in 2002.
Consolidated Freightways, the biggest less-than-truckload carrier in the nation when it failed, was once owned by Con-way predecessor CNF Inc. before being spun off as a separate entity in 1996. CNF was also a large transportation holding company for name brands such as Menlo Worldwide Logistics and regional less-than-truckload carrier Con-way Transportation. In 2006, CNF borrowed the name of its successful motor carrier business and became a hands-on operating company that includes renamed LTL subsidiary Con-way Freight.
Employers submit contributions for each employee to the Teamsters pension fund as specified in their contract.
CF was assessed a withdrawal liability of roughly $319 million at the time of its bankruptcy. The demand for twice as much money reflects the increased levels of underfunding with the Central States pension plan experienced from 2002-2004, according to Con-way.
The company is asking the district court in Northern California to find the company not liable for any of CF’s unpaid pension liabilities or to have the matter resolved through arbitration. CF’s bankruptcy estate has paid Central States about $59.5 million of its claim.
“Con-way continues to believe that its actions in connection with the CF spin-off were proper” and plans to “vigorously defend itself against these claims,” it said in a statement.
The payment demand, or other claims of unpaid withdrawal liabilities related to CF, eventually could have a material impact on operations or financial condition, Con-way said in its notification to the Securities and Exchange Commission. The case could take years to resolve given the complex legal issues involved.
In late 2007, the Teamsters allowed UPS to withdraw from the Central States pension plan and establish a joint, single-employer plan in exchange for a $6.1 billion payment to the plan. UPS agreed to the up front payment because of concerns that it would have to contribute to the unfunded pension liabilities of other companies in the plan. ' Eric Kulisch