To the relief of more than 6,500 retirees, the federal Pension Benefit Guaranty Corp. will assume responsibility for the pension plan of bankrupt Payless Cashways Inc., the Kansas City Star reports.
"PBGC is stepping in because the company is liquidating in
bankruptcy and can no longer sponsor the pension plan," said John
Seal, the agency's acting executive director. "Those who are already retired will continue to receive their monthly checks without interruption."
Meanwhile, Payless received permission in U.S. Bankruptcy
Court this week to sell 17 stores for a total of $33.7 million, about $2 million more than expected, according to the Star.
Payless filed for Chapter 11 protection on June 4. Then it
announced in late July that its efforts to reorganize had failed and that it would liquidate.
The company's pension plan was amended in June 1998, six months
after it emerged from a previous Chapter 11 filing, in an effort to
trim costs. The changes included freezing benefits on June 17, 1998; ending payments for health care benefits for retirees; and
eliminating a $5,000 life insurance benefit.
That meant anyone hired after June 17, 1998, became ineligible for pension benefits. But workers who were vested by that date should receive their pension benefits when they reach retirement
or at the age spelled out in the plan, the Star reports.
The agency said it expected that most Payless retirees would
receive their full benefits. However, because of the shortfall, there is a chance that in the future some adjustments will reduce benefits.
