MADAWASKA, Maine—The Pension Benefit Guaranty Corp. has assumed responsibility for the pension plan of Fraser Papers Ltd. of Madawaska, Maine.

The PBGC stepped in after the company’s parent, Fraser Papers Inc. of Toronto, sold substantially all operating assets to a group of creditors; the transaction did not include the pension plan. The U.S. unit and the parent are in bankruptcy protection both in the United States and Canada.

The salaried employees’ portion of the plan was frozen as of Oct. 31, 2009, and for bargaining unit employees as of April 28, 2010.

The pension plan for the eligible employees of Fraser Papers Ltd. is 44% funded, with about $83 million in assets and $187 million in liabilities, according to PBGC estimates. The agency expects to cover about $99 million of the $104 million shortfall. The plan was terminated as of April 28.

Assumption of the plan’s unfunded liabilities will increase the PBGC’s claims by $98.6 million and was not previously included in the agency's fiscal year 2009 financial statements.

Elizabeth Karier is the managing editor for Pensions & Investments, a sister publication of Business Insurance.