Milling & Baking News - December 15, 2009 - 8

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Sara Lee loses court challenge, must
help pay I.B.C. pension shortfall
WASHINGTON - U.S. District
Judge Henry Kennedy on Dec. 1
ruled that Downers Grove, Ill.-based
Sara Lee Corp. must help pay back a
$60 million retirement fund shortfall
related to the bankruptcy of Interstate Bakeries Corp.
In his ruling, Mr. Kennedy upheld
the decision reached by the Pension
Benefit Guaranty Corp. (P.B.G.C.) in
2006 that six baking companies, including Sara Lee, that had contributed to the American Bakers Association Retirement Plan were responsible for underfunded obligations to
I.B.C. employees.
The P.B.G.C. is a federal agency
founded by Congress in 1974. The
agency's role is to ensure that retirees
receive pension benefits they have
earned even if their employer has terminated its pension plan or is otherwise unwilling or unable to pay.
At the heart of the court challenge
was whether the joint plan was a
"multiple-employer plan," which is
a plan maintained by two or more
contributing employers under which

all plan assets are available to pay
benefits to all plan participants and
beneficiaries, or was an "aggregate
of single-employer plans," which
is an association of separate plans
in which each employer's contributions are maintained in separate accounts or otherwise restricted so that
the funds of each employer are used
only to pay the benefits of that employer's employees.
Sara Lee had urged the P.B.G.C. to
look to the plan's governing documents, "which express the intent to be
an aggregate of single-employer plans,
and no further," the court filings said.
"P.B.G.C. acknowledges that the
plan documents are evidence of intent to create an aggregate of singleemployer plans," the filing continued. "But it contends that the relevant provisions of those documents
merely state that intent rather than
implementing it. The language itself
does nothing to minimize the risk of
cost shifting among contributing employers."
Judge Kennedy was swayed by an

Cargill executives accept Malcolm
Baldrige award in Washington

WASHINGTON - Vice-President Joe Biden, left, congratulated Alan Willits, president of
Cargill Corn Milling, Minneapolis, after Cargill was awarded the 2008 Malcolm Baldrige
National Quality Award at a Dec. 3 ceremony at the JW Marriott in Washington. Gregory
Page, back right, chief executive officer of Cargill, also was on hand at the event . News
that Cargill had won the award was first announced in November 2008. The award
marks the second time in four years, and the third time overall, that a Cargill business
has received the Malcolm Baldrige Award. The award is the highest presidential honor
given out to organizations for innovation and performance excellence. MBN
bakingbusiness.com / world-grain.com

Business

alternative perspective offered by the
P.B.G.C.
"Although its 2006 letter clearly
concedes that the plan's foundational
documents present the plan as an aggregate of separate plans, AR 1570, it
was appropriate - probably even necessary - for P.B.G.C. to look beyond
that language to assess whether the actual operation of the plan conformed
to it," the judge said. "The standard
articulated in the 1979 and 2006 letters calls for looking to the operation
of a plan, and there is no reason why
P.B.G.C. should not do so."
In a June 21, 1979, letter sent to the
A.B.A., the P.B.G.C. determined the
joint plan was an "aggregate of singleemployer plans," but upon further
review, the agency on Aug. 8, 2006, issued a determination letter stating that
the A.B.A. plan "is, and indeed always
has been, a multiple-employer plan."
With the Dec. 1 ruling, I.B.C.'s share
of liabilities was reduced to $40 million from $69 million. Sara Lee, which
is partly responsible for the $60 million shortfall, will be able to use $27
million currently held in the fund
pending the P.B.G.C.'s outcome, to
pay the pensions of I.B.C. employees,
the filing noted. MBN

Court approves NutraCea
headquarters move
PHOENIX - The U.S. Bankruptcy
Court for the District of Arizona has
approved NutraCea's motion to reject its current headquarters lease and
enter into a new less expensive headquarters lease. Effective Dec. 7, NutraCea's new headquarters were to
shift to Scottsdale, Ariz., from Phoenix, where the company had been located since its founding in 2000.
"We are pleased with the court's
decision to allow us to quickly
move to more cost-efficient headquarters," said W. John Short,
chief executive officer. "Our new
space is approximately 75% smaller and over 80% less expensive.
This new space will allow us to
reduce our headquarters' rent by
over $100,000 per month and is
just one step in the process of reducing our corporate overhead."
NutraCea filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code on Nov. 10,
2009, in order to restructure its operations under court-supervised
protection. MBN
Milling & Baking News December 15, 2009 / 9

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Milling & Baking News - December 15, 2009

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