Polaroid Corp. is under investigation by the U.S. Department of Labor for possible violations of the federal law that protects the beneficiaries of company health and retirement plans, the Boston Globe reported, citing court documents.
Authorities are reviewing whether the Cambridge, Massachusetts-based company, which sought Chapter 11 bankruptcy protection in October, failed to safeguard plan funds and let participants know about changes in benefits, the paper said.
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Polaroid canceled health and life insurance benefits for its thousands of retirees on the eve of its Oct. 12 bankruptcy filing, the paper said. Since many of the notices were mailed late in the day, many recipients didn’t know that their benefits had been canceled until after Polaroid was operating under Chapter 11
protection, the paper said.
Skip Colcord, a Polaroid spokesman, told the paper, “We will cooperate with Department of Labor officials if they have any questions about our ERISA compliance.”
Investigators are focusing on possible violations of the Employee Retirement Income Security Act. The Labor Department’s Pension and Welfare Benefits Administration “has official investigations involving a number of employee benefit plans to evaluate whether violations . . . have occurred,” the paper said,citing a May 31 filing written by lawyers for Secretary of Labor Elaine Chao.
Massachusetts congressional leaders in Washington wrote a letter to Polaroid general counsel Neal Goldman, asking that Polaroid urge prospective bidders for the company to take over its pension plan, the Globe said. If the plan isn’t assumed by a buyer at a court auction next week, it probably will be assumed by the Pension Benefit Guaranty Corp. A takeover by the government agency would likely reduce pension payments to many people, and would result in big administrative costs that would take money away from other creditors, the paper said.
Calls to Colcord by Bloomberg News for further comment weren’t immediately returned.
Bloomberg News
