Washington: The Pension Benefit Guaranty Corporation and Sears Holdings Corp. (“Sears”) have reached an agreement that will protect the Sears’ pension plan. The agreement is conditioned upon the completion of definitive documentation in the next 60 days.
Under the agreement, Sears will continue to protect the assets of certain special purpose subsidiaries, which hold real estate and/or intellectual property assets.
Under the definitive documentation, the subsidiaries will grant springing liens on the protected assets in favor of PBGC. The liens will be triggered only by failure to make required contributions to the plan, prohibited transfers of ownership interests in the subsidiaries, termination of the plan, and bankruptcy of the company or certain of its subsidiaries.
The agreement reached by PBGC and Sears provides meaningful protections to the Sears plan’s 200,000 participants and the pension insurance program.
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