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Some Retirees at Knudsen Face Partial Loss of Pension Benefits

March 01, 1987|DENISE GELLENE

Nearly all the former employees of Knudsen Foods have found new jobs, but a small number of retirees stand to lose some of their pension benefits as a result of Knudsen's bankruptcy action, according to Robert Lia, a consultant who is acting chief financial officer of Knudsen.

Lia said a pension plan that covered some salaried employees for the years 1985 and 1986 was underfunded by an as yet undetermined amount.

As a result, about 200 retirees will lose a portion of their pensions, said Helen McGrath, a Knudsen retiree. She heads a group of former Knudsen workers that plans to hire a lawyer to press its claims in bankruptcy court. McGrath said that it isn't likely the employees will recover all lost benefits but added: "We wouldn't be doing this if we didn't expect to get something."

Her group, called Assn. of Former Salaried Employees of Knudsen, is seeking lost vacation, medical and life insurance benefits for retirees. She said that about 600 former employees have lost a portion of their benefits, and that medical benefits for the group runs out in May.

Knudsen filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code last September, a victim of the enormous debt that resulted from the June, 1985, purchase of its arch-rival, Foremost Dairies. It has sold off nearly all of its holdings, including the the bulk of its extensive California operations, which went to Kraft and Hughes Markets. Hughes continues to sell dairy products under the Knudsen name.

Lia said few of Knudsen's 5,000 employees have lost their jobs because most of the milk plants were sold to other milk processors. Of the 2,950 employees who worked in California, Nevada, Arizona and Hawaii, 450 lost their jobs. About 400 of those were employed at the Foremost plant in the City of Commerce that was closed last fall.

Lia said 370 employees still work for Knudsen, about half of them in Hawaii, where Knudsen still does business.

Lia said the proceeds of asset sales will enable Knudsen to fully repay a $150-million debt to its banker, Citicorp Industrial Credit Bank. A handful of other secured lenders will also be fully paid, Lia said. But the former owners of Foremost Dairies will probably receive between 25 cents and 50 cents on the dollar, and, he said, it is doubtful that unsecured creditors will get anything. "But we are still encouraging people to file their claims," he said.

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