Right after the bankrupt auto parts supplier Visteon Corporation (OTC:VSTNQ) had a healthy dose of investor activism, the management has decided to alter the reorganization plan.

Under the new reorganization plan, the company plans to retain the pension liabilities of its workers. The company was earlier seeking to transfer its pensions covering 23,000 employees and retirees to the government run Pension Benefit Guaranty Corporation (PBGC). As a result of this decision, the company will now make pension payments totaling US$320 million through 2015.

Visteon's decision to keep its pension plans is a victory for its workers and retirees," commented PBGC Acting Director Vince Snowbarger. "We will continue our efforts to make sure that a reorganized Visteon emerges financially sound and with its defined benefit pension plans intact."

Although the new plan still calls for the equity stock holders to be replaced with the term lenders, the plan comes as a respite for unsecured notes and bond holders. Under the new plan, term lenders will receive 85 percent of the common stock in the reorganized company. Senior note holders bearing coupon rate of 12.25 percent are expected to receive pro rata share of about 6 percent of the common stock. Similarly, holders of other unsecured notes and non-trade claims will be given their pro rata share of around 9 percent. General trade creditors are likely to be paid in cash an amount equal to their pro rata share of US$23.9 million.

In general, the new plan underlines higher pay out on the company’s part. This is something the management was not very comfortable with at the first instance but has gradually come to the terms with off late. The US economy and auto industry are slowly recovering, resulting in increased visibility of profit margins that allowed Visteon to take this decision. The plan reflects the company's better operating and financial performance, and improvement in the automotive industry.

The new plan “has the express and unanimous support” of its committee of lenders, as well as the backing of the vast majority of its debt holders. If the new plan gets implemented, the company will become virtually debt free.

At 68 cents per share, down 7 percent, the stock offers significant return opportunities as and when the company emerges from bankruptcy protection. In addition of a strong balance sheet, having old connections with Ford as a former parent also has its advantages in terms of potential business.