Furniture Brands Wind Down Inc., the remnant of bankrupt Furniture Brands International, has reached a deal with its creditors and the federal Pension Benefit Guaranty Corp.
The settlement, which still needs court approval, has the PBGC reducing its claim against the company from $340 million to $300 million.
In November,the PBGC said it would pay all pension benefits earned by Furniture Brands retirees up to the legal maximum of about $57,500 a year for a 65-year-old. The company has about 19,000 current and future retirees. When it filed for Chapter 11 bankruptcy protection on Sept. 9, Furniture Brands said it owed $609 million in benefits obligations, but it was only funded about 55 percent, according to PBGC.
The agency said it would cover $270 million of Furniture Brands’ pension obligations.
Most of Furniture Brands’ assets were purchased by KPS Capital Partners, which created Heritage Home Group to serve as the new parent company for Lane, Broyhill, Thomasville and other former FBI companies.
Lane, headquartered in Tupelo, employs several hundred at its Tupelo plant. It recently closed its Saltillo plant, laying off 480 people, and its Verona facility is up for auction.
In addition, the creditors and PBGC agreed on a liquidation plan, and if the proceeds are more than $20 million, minus fees and other expenses, then 20 percent of the PBGC’s share will be made available to unsecured creditors.
A hearing will be held April 28 on the settlement.
The PBGC protects more than 42 million private-sector pension holders, including 1.5 million people in failed pension plans. Funding is provided by insurance premiums, investment income and assets and recoveries from failed pension plans.