The federal Pension Benefit Guaranty Corp. will pay the pensions of some 19,000 current and future retirees of bankrupt Furniture Brands International, the agency said today.
KPS Capital Management is the lone bidder to purchase the assets of Furniture Brands for $280 million, a sale that still needs approval by the U.S. Bankruptcy Court of the District of Delaware. The court will convene today at 2 p.m.
KPS, however, is not assuming the pension of Furniture Brands, so the PBGC stepped in.
The PBGC said it will pay all pension benefits earned by Furniture Brands retirees up to the legal maximum of about $57,500 a year for a 65-year-old.
Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible, the PBGC said.
Employees and retirees who are participants in pension plans that were rolled into the Furniture Brands plan also will continue to receive benefits from the company until PBGC assumes responsibility.
The PBGC estimates Furniture Brands’ retirement plan is only 55 percent funded, with about $337 million in assets to pay $609 million in benefits. The agency will cover $270 million of the $272 million difference.
Lane Furniture Industries, a division of Furniture Brands, employed about 1,400 people prior to Furniture Brands’ Chapter 11 filing on Sept. 9.
The PBGC protects more than 42 million private-sector pension holders, including 1.5 million people in failed pension plans. Funding is provided by insurance premiums, investment income and assets and recoveries from failed pension plans.