Butzel asks government for pension plan bailout

By Gary Gosselin Dolan Media Newswires DETROIT, MI--Butzel Long has asked the government to take over its pension plan, which it says is underfunded by more than $9 million, so it can complete a restructuring plan. The Detroit-based firm has been in discussions with the Pension Benefit Guarantee Corp., a government agency, to take over its pension fund of $33 million. This is the last major piece of overhead in the process to keep the firm healthy and to maintain a viable firm and grow, said Justin Klimko, president and managing shareholder. "We do intend to grow prudently, we will develop our practice areas we're known for, and will continue to add people and continue to run the business in a responsible fashion," he said. Although PBGC takeover is often associated with bankruptcy or going out of business, it doesn't necessarily have to be so, said Ann Arbor attorney Robert Stevenson, who specializes in pension and benefits law. Other types of businesses ask PBGC for help, so why not a law firm, Stevenson said. "Whether it's a manufacturer or a law firm, there is no reason why they should be stuck," said Stevenson, of Stevenson Keppelman Associates, who has specialized in the law of employee benefits for 36 years. "[The PBGC] recognizes they can't win the battle and lose the war, but the PBGC will scrutinize it thoroughly; you have to put yourself in about as much pain as being in bankruptcy." The biggest factor in the need for PBGC assistance is low interest rates, Klimko said. He said the firm froze pensions for new attorneys in 2004 and for new employees in 2007, but because interest rates are so low--and will be for years to come--the costs to fund the obligation continue to climb. The plan has 450 members, and about 100 of those still work at the firm. Butzel has offices New York City and an affiliate office in Washington, D.C. The firm dropped from 202 attorneys in Michigan in 2009 to 123 in 2012, according to Michigan Lawyers Weekly's "Largest Law Firms" directory. Klimko said the firm has a total of 135-140 lawyers. Stevenson said freezing the pensions is the first step the PBGC wants to see, showing that you've done everything to stop the bleeding. "And basically what the PBGC says is, if you want his relief outside of bankruptcy, we want to see who else is suffering," Stevenson said. "In the end, the PBGC gets the plan, some people will get haircuts, and the PBGC will work something out with Butzel--payments over time and maybe some collateral." Butzel has been working with the PBGC since November 2012, Klimko said, and mailing the application Jan. 19 was the final step. There were a number of issues to deal with in the last four years, Klimko said. "It was a combination of things; the economy had a major effect, we wound up with more overhead than we needed," he said. He acknowledged there was some turmoil at the firm when the former chairman left, causing some others to go as well. Stevenson said he has dealt with similar situations, and the process should take about six months or so. "The PBGC investigates the heck out of these things," he said. "I'd give the best plan I could, like a detailed five-year plan, like you'd be giving to the pickiest lender in the world. They are no nonsense, very analytical." The PBGC just raised the maximum benefit for a 65-year-old to $57,500, said PBGC spokesman Marc Hopkins; younger claimants get less and older retirees get more. Hopkins could not discuss the Butzel case specifically, but said the process--without bankruptcy --is "relatively routine." "It is always our preference not to have to take over but we don't want to put anyone out of business either," Hopkins said. "If a company is struggling and they can't pay their bills and meet obligations, then we will examine their books, and at the end of the day, if we find that they can't take care of business, we will step in." Published: Mon, Feb 4, 2013

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