By Rachel Siegel | The Washington Post

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 PBGC specifically pointed to a $1.7 billion funding gap that, the corporation says, Lampert’s bid doesn’t account for.

Plus, bankruptcy experts say Sears could become the latest example among retailers and other companies that, once thrown into bankruptcy, see their pension plans wiped clean.

When companies file for bankruptcy, it’s 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 PBGC 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 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. The proposal was made through Lampert’s hedge fund, ESL Investments. ESL declined to comment.

Lampert’s proposal still has to be approved by the bankruptcy court. A hearing is set for Feb. 4.

The PBGC often steps in for underfunded pension plans when companies can’t pay. The agency funds itself off of insurance premiums paid by pension funds, not taxpayer money.

On Jan. 18, the PBGC 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, PBGC is Sears’ largest unsecured creditor.

Anticipating Sears’ decline, the PBGC 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.

Sears filed for bankruptcy in October, prompting calls for the 126-year-old company to finally meet its end. Despite Lampert’s moves to keep the chain alive, the company’s unsecured creditors have cautioned against an attempted revival that might only cause more harm. On Jan. 17, the lawyers for a committee of Sears’ unsecured creditors asked a judge for permission to sue Lampert and ESL Investments over the company’s demise.

“ESL’s current bid to ‘save the company’ is nothing but the final fulfillment of a years-long scheme to deprive Sears and its creditors of assets and its employees of jobs while lining Lampert’s and ESL’s own pockets,” the lawyers wrote.

The PBGC’s criticism is unlikely to have any impact on whether the sale goes through, Perkins said. The PBGC is in line behind many other secured lenders and claimants that, in the bankruptcy process, take priority.

But when it comes to advocating for workers, Perkins said there’s still “a shakedown value” in the PBGC making its voice heard.

“What they’re saying is that . . . (Lampert) is benefiting out of this thing, and we need to benefit more than we are,” Perkins said.

The fate of Toys R Us could still be fresh in the minds of PBGC officials, Perkins said. Workers and activists groups have kept up pressure on the firms that bought Toys R Us to pay severance.

In November, Kohlberg Kravis Roberts and Bain Capital announced that each had committed $10 million to a fund for former Toys R Us workers. The amount pledged was well below the $75 million a workers rights group said was owed to laid-off workers. But the fund was still considered rare among private-equity-backed companies that file for bankruptcy.

Generally it works the other way: When Marsh Supermarkets filed for bankruptcy in 2017, its owner — the private-equity firm Sum Capital — left more than $80 million in debts to workers’ severance and pensions unpaid.

Now advocates are pressuring Sears to protect its own pension plans.

“Money set aside for pensions is not a liability — it’s a duty and promise to hardworking people,” said Lily Wang, an organizer with the labor group Rise Up Retail. “Wall Street firms assume that responsibility when they buy companies, and that doesn’t change just because they run it into the ground.”

Bruce Miller, 56, worked at Sears for nearly 36 years when he was laid off from his New Jersey store in June. After losing his job, he lost his house as well. He’s worried that Lampert isn’t going to fund pension plans for him and his fellow workers.

He’s afraid of Lampert sending one message: “There’s no more money in the pension plan. You’re out of luck.”