The federal agency preparing to take over Sears' pension plans is opposing Sears chairman Edward Lampert's plan to buy the retailer out of bankruptcy.
Lampert's $5.2 billion bid to buy the Hoffman Estates-based retailer's 425 stores seeks to keep the company in business and says it will preserve 45,000 jobs. A committee of Sears' unsecured creditors on Monday filed an objection to the proposed sale to Lampert.
The Pension Benefit Guaranty Corp., a member of that committee, added independent objections in a Saturday filing with the U.S. Bankruptcy Court for the Southern District of New York. The agency covers individuals' pensions, up to certain limits, if an insured pension plan shuts down without enough money to pay all benefits.
The PBCG said earlier this month it would seek to take over Sears' plans, which cover more than 90,000 people, by Jan. 31 after concluding the retailer's continuation of the plans was "no longer possible." The agency estimates Sears owes it more than $1.7 billion, according to the Saturday court filing.
While the PBGC is a federal agency, it is not funded by taxpayer dollars. Its operations are financed by insurance premiums, investment income and recoveries from failed single-employer plans.
Sears entered into a five-year pension protection plan with the agency in 2016. That agreement gave the PBGC an interest in intellectual property related to the Kenmore appliance and DieHard auto products brands, to protect the PBGC if Sears' finances deteriorated.
The company's proposed sale would leave those brands under control of Lampert's hedge fund, ESL Investments, according to the PBGC.
In a court filing earlier this month, the unsecured creditors committee claimed ESL's $5.2 billion proposal is "nothing but the final fulfillment of a years-long scheme to deprive Sears and its creditors of assets and its employees of jobs while lining Lampert's and ESL's own pockets."
Sears and ESL could not immediately be reached for comment. ESL has denied the committee's allegations and said its transactions with the retailer had the approval of the company's board and independent advisers and were "done in good faith, on fair terms, beneficial to all Sears stakeholders."
Lampert's proposal to buy the company still needs the bankruptcy court's approval and a hearing has been scheduled for Feb. 4.