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According to The Wall Street Journal, Sears lawyer Ray Schrock told a bankruptcy judge on Thursday that the Pension Benefit Guaranty Corp. (PBGC) has resolved its $1.7 billion dispute against the company and will back Lampert’s bid for the embattled retailer.
The news is a major reversal as just last week, PBGC filed documents with U.S. Bankruptcy Judge Robert Drain protesting Lampert’s hedge fund ESL Investments deal to buy the company, citing it doesn’t account for a very large funding gap for pension plans that has existed for years.
As reported by FOX Business, the company’s long-term obligations have been underfunded by more than $1 billion for years. Recently, PBGC said they are currently 64 percent funded—making it Sears’ largest unsecured creditor. As a federal backstop for private retirement plans, PBCG is designed to pay benefits when plan sponsor no longer can.
“This settlement is phenomenal,” Schrock, Sears’ attorney said in court on Thursday, adding that the government-run program is set to receive an unsecured $800 million from Sears’ bankruptcy estate as part of the agreement.
Neither ESL or PBGC would comment to FOX Business’ regarding the news.
However, despite the reported win, other lower-ranking creditors and employees are still continuing to raise their concerns about the deal.
In a letter sent to U.S. Bankruptcy Judge Robert Drain on Monday, a group of employees for Sears Holdings, through an action group called Rise Up Retail, urged the presiding judge to give them a "seat at the table", saying the transaction is just a scheme for the former Sears CEO to “steal” key Sears assets.
"For the sake of our jobs, our co-workers, our communities, and our families, we want Sears Holdings to succeed, not be a pawn in Lampert’s game," the employees wrote.
"The reality, as we know from our lived experience, is that Lampert has been putting the company through the longest liquidation in retail history. If he regains control of Sears, he will merely continue that slow burn."