The agency will pay the retirement benefits for more than 19,000 current and future retirees of the furniture manufacturer, which is based in St. Louis, Missouri. The PBGC has taken on this responsibility because Furniture Brands intends to sell the majority of its assets in bankruptcy and the buyer will not assume responsibility for the pension plan.
In September, the company and its affiliates sought Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Delaware. In October, Furniture Brands announced an agreement to sell the majority of its assets to KPS Capital Partners. An auction is scheduled for November to secure the highest value for the company’s assets.
The PBGC 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.
According to PBGC estimates, the Furniture Brands Retirement Plan is about 55% funded with about $337 million in assets to pay $609 million in benefits. The agency expects to cover $270 million of the $272 million shortfall.