Exec's Sears bid spurs pension objection
Chairman Eddie Lampert's last-ditch moves to save Sears have been lambasted by workers rights groups, the company's unsecured creditors and bankruptcy experts alike.
The latest stakeholder to come out swinging: the pension insurer for the U.S. government.
The Pension Benefit Guaranty Corp. over the weekend came out against Lampert's proposed $5.2 billion bid for the retailer. In papers filed in U.S. Bankruptcy Court on Saturday, the insurer specifically pointed to a $1.7 billion funding gap for which that, the corporation says, Lampert's bid doesn't account for.
When companies file for bankruptcy, it has become common for them to shed pension plans they can't fund, said Larry Perkins, a bankruptcy expert and chief executive of SierraConstellation Partners. That's one reason the insurance agency exists in the first place: to protect pensioners.
"Overwhelmingly, they're left holding the bag," Perkins said.
Earlier this month, Sears avoided a total shutdown after Lampert's hedge fund won a bankruptcy auction for Sears Holdings Corp. Lampert had upped his offer to $5.2 billion as part of a pitch to keep roughly 400 stores open nationwide -- and spare 45,000 jobs. Lampert's proposal still has to be approved by the bankruptcy court. A hearing is set for Monday.
The agency often steps in for underfunded pension plans when companies can't pay. It funds itself off of insurance premiums paid by pension funds, not taxpayer money.
On Jan. 18, the pension insurer said it would take over some of Sears' defined-benefit pension plans covering 90,000 people and which are 64 percent funded, The Wall Street Journal reported. By making up the difference, the agency is Sears' largest unsecured creditor.
Anticipating Sears' decline, the Pension Benefit Guaranty Corp. bought a stake in the Kenmore and DieHard brands. It said that if Lampert's bid is approved, the sale would undercut its interests in those brands and their royalty payments.
-- The Washington Post
California wildfire claims top $11.4B
SACRAMENTO, Calif. -- Insurance claims from California's deadly November 2018 wildfires have topped $11.4 billion, making the series of fires one of the most expensive in state history, officials said Monday.
More than $8 billion of those losses are from the fire that leveled the town of Paradise, killing 86 people and destroying roughly 15,000 homes, state Insurance Commissioner Ricardo Lara said. About $3 billion worth of damage is related to two Southern California wildfires that ignited during the same week.
"We have a long way to go before we can feel whole again," Lara said after announcing the numbers.
The $11.4 billion total is slightly below the losses claimed from 2017 wildfires that ripped through Northern California wine country in October and Southern California in December.
-- The Associated Press
Legislator's child-labor bill scrutinized
INDIANAPOLIS -- An Indiana lawmaker's efforts to eliminate the state's child labor laws have raised conflict-of-interest concerns because he employs hundreds of minors at a ski resort.
Republican Sen. Chip Perfect's bill would remove work-permit requirements for minors and remove restrictions on hours that 16- and 17-year-olds can work, The Indianapolis Star reported. Perfect is the chief executive of Perfect North Slopes, which employees 300 to 400 minors.
Indiana Senate rules say a lawmaker should consider if a bill has a "unique, direct and material effect" before voting on it.
Perfect's business interests mean his involvement in the bill should be scrutinized, said Julia Vaughn, the policy director for political watchdog group Common Cause Indiana.
Perfect said the bill focuses on small businesses and that there's no conflict of interest.
-- The Associated Press
Chemical, TCF banks agree to merger
DETROIT -- Chemical Financial Corp. plans to acquire TCF Financial Corp. in an all-stock deal worth $3.6 billion that will create a Detroit-based bank with $45 billion in assets.
Chemical Financial and Wayzata, Minn.-based TCF announced Monday the signing of an agreement that the companies described as a "merger of equals."
Plans call for TCF to merge into Chemical Financial, and the combined holding company and bank will operate under the TCF name and brand. The company will have more than 500 branches in nine states, with "significant operation centers" including Minneapolis and Chicago.
The deal is subject to regulatory approval.
-- The Associated Press
Judge orders group to pay $1B for fraud
MIAMI -- A federal judge in Florida has ordered $1 billion in payments and fines in a fraud scheme that fleeced thousands of investors.
The Securities and Exchange Commission said in a news release Monday that the Woodbridge Group of Companies and its former owner were ordered to pay the money to investors as well as civil fines and interest.
The SEC in 2017 filed an emergency court action against Woodbridge and owner Robert Shapiro claiming the companies falsely lured investors by advertising high returns on loans supposedly made to commercial property owners. In reality, the SEC says, Woodbridge made no interest payments and used money from new investors to pay older ones in classic Ponzi scheme fashion.
About 8,400 investors were defrauded.
Boca Raton-based Woodbridge filed for bankruptcy in 2017.
-- The Associated Press
Textile exec accused of Amtrak bribe
MILFORD, Del. -- A former textile manufacturing executive is accused of bribing an Amtrak employee to secure contracts worth millions for his Delaware employer.
The News Journal of Wilmington, Del., reported that Scott Crothers is charged with bribing Timothy Miller with more than $20,000 cash and multiple trips to Rehoboth Beach. Miller pleaded guilty last year to his side of what prosecutors called a "kickback scheme" that resulted in First State Manufacturing winning nearly $8 million in contracts for seat cushions and carpeting from the government-owned train company.
Crothers' attorney indicated in court documents filed this month that another First State Manufacturing executive will be charged.
An attorney for the firm's co-owner says First State Manufacturing is cooperating with authorities. The lawyer, Elizabeth Fenton, called the scheme "an aberration."
Crothers' plea hearing is scheduled for February.
-- The Associated Press
Business on 01/29/2019
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