NEW YORK (Reuters) – A U.S. agency that insures employee pensions sought permission on Friday to take over two underfunded Sears Holdings Corp pension plans, after objecting to Sears Chairman Eddie Lampert’s proposed $5.2 billion buyout of the bankrupt retailer.
FILE PHOTO: A dismantled signal sits leaning outdoors a Sears division retailer at some point after it closed as a part of a number of retailer closures by Sears Holdings Corp within the United States in Nanuet, New York, U.S., January 7, 2019. REUTERS/Mike Segar/File Photo
In a grievance filed in Chicago federal courtroom, the Pension Benefit Guaranty Corp requested to be named trustee of the pension plans, which it stated are underfunded by $1.four billion and canopy about 90,000 Sears and Kmart staff and retirees.
The PBGC additionally requested that the plans be terminated as of Jan. 31, 2019.
Friday’s request got here six days after the PBGC objected to the takeover of Sears by Lampert’s hedge fund ESL Investments, which had gained an public sale for the Hoffman Estates, Illinois-based retailer final month.
In a submitting with the White Plains, New York courtroom overseeing Sears’ Chapter 11 case, the PBGC stated Lampert’s proposal would strip its rights in logos and licensing royalties from the DieHard and Kenmore manufacturers.
That would “intentionally undermine PBGC’s statutory and contractual pension plan protections,” the agency stated.
A spokesman for Sears declined to remark.
In a chapter courtroom submitting on Friday, ESL stated the PBGC “misread” the buyout phrases and its objection ought to be rejected.
Created in 1974, the PBGC makes use of employer insurance coverage premiums, funding earnings and different funds to pay retiree advantages.
Sears, based 126 years in the past, filed for chapter in October after a protracted decline marked by an excessive amount of debt, scant funding and misplaced market share to retailers similar to Walmart Inc, Home Depot Inc and Amazon.com Inc.
The proposed ESL takeover requires 425 Sears and Kmart shops to stay open and 45,000 staff to hold their jobs, however has drawn objections from a committee of unsecured collectors.
ESL on Friday urged U.S. Bankruptcy Judge Robert Drain to reject these objections.
“The question before the court is whether the debtors exercised sound business judgment in approving the proposed sale,” ESL stated, referring to bankrupt Sears entities. “The record abundantly demonstrates that they did.”
The subsequent listening to is about for Monday morning.
The PBGC case is Pension Benefit Guaranty Corp v Sears Holdings Corp, U.S. District Court, Northern District of Illinois, No. 19-00669. The chapter case is In re: Sears Holdings Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 18-23538.
Reporting by Jonathan Stempel in New York; Editing by David Gregorio