The Central States pension fund has assessed a withdrawal liability of $319 million against Consolidated Freightways, which closed in September 2002. Con-way has filed for arbitration.
Following the spin off of Consolidated Freightways (CF) from what became Con-way, the long-haul carrier closed its doors, leaving the bankruptcy court to sort out its debts and liabilities. The Central States pension fund has assessed a $319 million withdrawal liability against CF and, reportedly has contacted Con-way and asked to discuss the matter.
Con-way has filed an arbitration demand and a federal lawsuit asking the court for a quick summary judgment that Con-way is not liable for CF's unpaid withdrawal liability.
Stifel Nicolaus analyst David Ross reports CF had other pension withdrawal liabilities of $80 million from other underfunded multiemployer pension plans.
Con-way (formerly CNF) spun off the CF operation as a debt-free, profitable company in 1996, says Ross. Con-way reported net revenues of $4.39 billion in 2007 and Stifel Nicolaus estimates the company will top $5 billion in net revenues in 2008 and 2009.
“The Central States plan remains the most woefully underfunded of the union trucking umltiemployer plans, with YRC Worldwide citing roughly a $3 billion+ contingent withdrawal liability and Arkansas Best citing an approximate $650 million contingent withdrawal liability just for the one plan,” says the Stifel Nicolaus report.
Under a recent contract agreement between the International Brotherhood of Teamsters and UPS, UPS was allowed to withdraw employees from the Central States multi-employer pension plan and establish a jointly trusteed single-employer pension plan after making a $6.1 billion pre-tax payment to the plan in connection with its withdrawal.