notifying PBGC

Is plan administrator required to notify PBGC upon realizing that plan cannot be terminated using standard termination, because it is underfunded and will be filing for bankruptcy.  Client is going out of business and we've been in talks with PBGC and on track to do a standard termination (per PBGC's suggestion and also because it was possible we could fund the plan), but now we know we will be underfunded.  Do we have to let PBGC know that we know for certain now we're underfunded? Proposed termination date is 7/31.  

I believe you are required to File Form 10 to notify the PBGC within 30 days unless an exception applies. Filing a distress termination with the PBGC may qualify as notice, I haven't looked. But one way or another, you are going to have to involve the PBGC to terminate the Plan.

Implied in the OP is that a Form 500 has been filed.  Please clarify.

If the plan has reached the point of filing a Standard Termination Notice, you must inform the PBGC that the enrolled actuary's certification of sufficiency (Schedule EA-S) is no longer valid.  The plan sponsor should then initiate a distress termination by issuing a new Notice of Intent to Terminate to participants and to the PBGC (which is a recipient of NOIT's in distress terminations but not in standard terminations).

If the Standard Termination Notice hasn't yet been filed, the PBGC doesn't yet know "officially" about the termination.  A distress termination NOIT should be issued.

It goes without saying that you should apprise the PBGC personnel with whom you have been communicating about the client's altered circumstances.