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The Washington Post reports that The Pension Benefit Guaranty Corp. (PBGC) described as “the pension insurer for the U.S. government,” has come out in opposition to Sears Holdings’ chairman Eddie Lampert’s $5.2 billion bid to acquire the bankrupt retailer, citing what it sees as the likelihood that the company’s pensioners will end up getting the short end of the stick.

“The PBGC often steps in for underfunded pension plans when companies can’t pay,” the story says. “The agency funds itself off of insurance premiums paid by pension funds, not taxpayer money.”

According to the story, “In papers filed in U.S. Bankruptcy Court on Saturday, the PBGC specifically pointed to a $1.7 billion funding gap that, the corporation says, Lampert’s bid doesn’t account for. Plus, bankruptcy experts say Sears could become the latest example among retailers and other companies that, once thrown into bankruptcy, see their pension plans wiped cleaned … To help protect the Sears pension plans, the PBGC negotiated an agreement with Sears that included a stake in the Kenmore and DieHard brands. It said that if Lampert’s bid is approved, the sale would undercut its interests in those brands and their royalty payments.”

The Post notes that “Lampert’s proposal still has to be approved by the bankruptcy court. A hearing is set for Feb. 4.”
KC's View:
The bet here is that if Lampert gets Sears, the pensioners are screwed. Then again, they may be largely screwed anyway … but I’d hate to depend on Lampert for anything.