The Pension Benefit Guaranty Corp. on Thursday announced it would pay $270 million in pension benefits to more than 19,000 current and future retirees of bankrupt Furniture Brands International of St. Louis.
The agency, which will hold an auction today to sell the furniture maker's assets, said it would take over the pension fund, which is about 55 percent funded. The fund has $337 million in assets against $609 million in future unfunded liabilities. The agency, which is the government's insurer for private pension plans, said it expected to make up all but $2 million of the shortfall.
All participants in the plan will receive their benefits up to the annual maximum allowed by law of $57,500. The PBGC said current retires would see no interruption in benefits.
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On Sept. 9, Furniture Brands, which had manufacturing plants in North Carolina and Mississippi, sought Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del. Last month, the company announced an agreement to sell all of its assets but the pension fund to KPS Capital Partners of New York for $280 million. The PBGC set the auction to ensure the highest possible price was paid for the assets.
Furniture Brands was started in 1921. In the early 2000s, it was the nation's largest furniture manufacturer with more than $2 billion in annual sales. Its brands included Broyhill and Thomasville.
The PBGC is responsible for paying the retirement benefits of more than 1.5 million people who participate in failed pension plans. It receives its money from premiums paid by the pension plans.
Last week, the PBGC announced that its deficit this year was $36 billion, up from $34 billion in 2012.
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