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- Title
INVESTMENTS.
- Abstract
The article reports that Pilkington, a British corporation that purchased a division of Revlon as its American subsidiary, sued the fiduciaries of the Revlon division's pension plan for breach-of-fiduciary duty when it was required to make up the shortfall in benefits owed to the employees after the annuity carrier selected by those fiduciaries defaulted and collapsed. In December of 1985, Ronald Perelman completed a hostile takeover of the cosmetic giant, Revlon Corp. The plan was significantly overfunded with $200 million in assets. Purchasing the annuity contract from Executive Life to provide the same benefits to existing plan members cost Revlon only $85 million and resulted in the reversion to Perelman and his new Revlon conglomerate of the remaining $115 million in assets. When Executive Life officially defaulted, Pilkington brought suit claiming that Revlon violated its twin duties of prudence and loyalty to plan beneficiaries and participants under Employee Retirement Income Security Act by choosing an unstable insurer. Due to the potential conflict of interest, summary judgment was improper, and the appeals court revived Pilkington's suit and sent it back to district court for further proceedings.
- Subjects
BUSINESS judgment rule; FIDUCIARY liability; PILKINGTON PLC; ANNUITY laws; RETIREMENT income; PENSION trusts
- Publication
Benefits Quarterly, 1997, Vol 13, Issue 3, p100
- ISSN
8756-1263
- Publication type
Article