As the process of Hancock Fabrics’ bankruptcy and liquidation draws to a close, a few details remain to be settled in the U.S. Bankruptcy Court in Delaware.
Among them is a settlement agreement between the former retailer and the Pension Benefit Guaranty Corp., which took over as trustee of Hancock’s pension plan earlier this year.
In the settlement to be reviewed Oct.18 by the court, the two parties have agreed that the PBGC will have a single general unsecured claim for $67.4 million and a single administrative claim of $137,500.
The PBGC was seeking some $80 million through various claims from Hancock.
But with the the possibility of “time-consuming” and “burdensome” court proceedings, the agency and Hancock agreed to the settlement.
As for the 4,200 pensioners, the behind-the-scenes negotiations has not, and will not, affect their pension payments, a PBGC spokesman said.
“We trusteed that plan last year, and the 4,200 people in that plan will continue to get their benefits in perpetuity, and that court action will have no impact on them at all,” he said.
After settling differences with Hancock Fabrics over the takeover of its pension plan last fall, the Pension Benefit Guaranty Corporation assumed responsibility for paying the pension benefits of nearly 4,200 people covered by the Hancock pension plan.
Hancock filed for Chapter 11 in February of last year and liquidated its remaining stores on July 31 of that year. Its pension plan has been underfunded by nearly $60 million.
Hancock’s pension plan covers 4,149 people, including 2,286 retirees.
The PBGC protects the retirement incomes of nearly 40 million American workers in nearly 24,000 private-sector defined benefit pension plans. A defined benefit plan provides a specified monthly benefit at retirement, often based on a combination of salary and years of service.
PBGC was created by the Employee Retirement Income Security Act of 1974 and is not funded by general tax revenue. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.
In 2016, PBGC paid for monthly retirement benefits, up to a guaranteed maximum, for nearly 840,000 retirees in more than 4,700 single-employer and multi-employer pension plans that cannot pay promised benefits. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1.5 million people.