JCPenney is getting rescued from bankruptcy in a plan that stands to worsen its workers’ nest eggs.
The century-old department store’s soon-to-be new owners said they don’t plan to take control of the retailer’s pension promises to some 52,000 current and future retirees, according to court documents.
Mall owners Simon Property Group and Brookfield Asset Management rejected the $3.2 billion pension obligation, which means it will now be funded by the Pension Benefit Guaranty Corp.
But the federal agency’s caps on monthly pension payouts stand to dampen payouts, especially to former high-level JCPenney executives, according to a Dallas Morning News report on Wednesday.
The new owners also rejected the company’s retiree medical and life insurance benefits under the sale agreement, documents show.
The PBGC didn’t immediately respond to a query about how JCPenney’s current workers and retirees might be affected.
Plano, Texas-based JCPenney revealed in court documents this week that it is inching towards its exit from bankruptcy and expects the plan to be complete in time for the lucrative holiday shopping season.
Separately, 160 stores and six distribution centers that Penney owns are going to its secured lenders. The department store will lease them back, according to the report in a deal that bankruptcy judge David Jones referred to as “one of the longest, most complex lease agreements known to man.”