Propex asks for court approval to continue contributing to employee pension plans

By Jennifer Lanning Drey

Portland, Ore., May 21 - Propex Inc. asked for court approval to continue to pay the minimum funding obligations under its two company-sponsored benefit pension plans, according to a Tuesday filing with the U.S. Bankruptcy Court for the Eastern District of Tennessee.

Propex is on a quarterly contribution schedule for the plans and currently owes $700,000 for the minimum funding payment due on April 15.

In the filing, Propex said terminating the pension plans would create a large claim against the company's estate and possibly result in large liabilities for Propex's overseas affiliates.

According to the motion, when Propex's balance of unpaid contributions exceeds $1 million, a lien in favor of the plan is imposed on all property of the plan sponsor. The lien could be imposed on Propex's non-debtor affiliates, Propex said.

Propex also said the company would incur additional expense to notify the almost 3,000 plan participants that the plan was discontinued and to prepare the valuations required to prepare the notices.

The company also said it would avoid significant tax penalties by making the payment.

A hearing has been scheduled for June 11.

Propex is a Chattanooga, Tenn., producer of primary and secondary carpet backing. It filed for bankruptcy on Jan. 18, and its Chapter 11 case number is 08-10249.

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