A crunch meeting to save the retirement hopes of up to 40,000 workers and former employees of Turner & Newall, an engineering company facing bankruptcy, takes place today in New York.
Representatives from Amicus, Transport & General Workers and GMB unions flew out to New York yesterday for a showdown with Carl Icahn, one of the leading bondholders of Federal Mogul, T&N's parent.
Mr Icahn, who built up a personal fortune of about $5.8bn (£3.15bn) by raiding distressed companies, holds the power to decide the fate of T&N's pension scheme. It has a shortfall of about £875m, but its £1bn of assets were frozen two weeks ago by the Federal Mogul's administrator, Kroll Associates.
If Mr Icahn demands that the scheme be closed down permanently, without the shortfall made good, the pensions of 40,000 workers and former employees would be crippled.
Up to 20,000 workers could lose up to 70 per cent of their pension entitlement, and the pensions of 20,000 retired workers would no longer rise in line with inflation. Winding up the pension scheme with such a large deficit would also trigger the insolvency of T&N, jeopardising 4,000 jobs in the UK.
Alexander Forbes, the independent trustee of the T&N pension scheme, its lawyers, Allen & Overy, and the union officials will meet with Mr Icahn this afternoon to broker a settlement. Also present will be the asbestos claimants who have driven Federal Mogul into bankruptcy. They and Mr Icahn want to restructure the group, but need the co-operation of the UK subsidiary.
Federal Mogul has offered a one-off payment of £65m to keep the scheme afloat, but the independent trustees have turned this down. They want £29m a year on top of the £7m the company already contributes, to safeguard the scheme and the future of T&N in the UK.
Union officials met with the Government last week to seek assurances that should the scheme close down, workers and pensioners will get financial assistance.Reuse content