The Pension Benefit Guaranty Corp. will receive $9.5 million for the three
terminated pension plans of Aloha Airlines in Honolulu in a settlement over the
plans’ investment losses on company stock, according to a Department of Labor
news release.
The settlement resulted from an investigation conducted by the Labor
Department’s Employee Benefits Security Administration, which reached an
agreement with the former airline’s holding company as well as Bank of Hawaii
and First Hawaiian Bank. The PBGC is the plan’s trustee, having taken over the
plans in April 2006.
Aloha and Bank of Hawaii, as the plans’ fiduciaries, were accused of
breaching their fiduciary duties under ERISA by allowing the plans to buy newly
issued stock of the airline’s holding company in September 2000 for more than
its fair market value.
As the plans’ investment manager, First Hawaiian Bank
knowingly participated in the fiduciary breaches by facilitating the stock
transaction and therefore violated its duties as a co-fiduciary, according to
the Labor Department.
Aloha Airlines originally filed for Chapter 11 bankruptcy protection in
December 2004 and notified employees in October 2005 that it would seek
bankruptcy court approval to terminate its pension plans. The airline filed for
Chapter 11 bankruptcy protection a second time in March 2008.
Filed by Pia Sarkar of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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