Hancock asks PBGC to oversee pension plan

Sept. 29--TUPELO -- Hancock Fabrics has filed a motion with the U.S. Bankruptcy of Delaware, asking it to approve an agreement in which the Pension Benefit Guaranty Corporation takes over its under-funded pension plan.

Hancock, which filed for Chapter 11 bankruptcy protection in February and later moved to liquidate, essentially went out of business on July 31 after the rest of its stores closed.

The remnants of the fabrics and craft retailer is winding down its operations.

When it filed for Chapter 11 on Feb. 2, Hancock listed debt of $182 million and assets of $151.4 million. Its pension plan was under-funded by $41.6 million.

Hancock established its pension Feb. 1, 1978.

The PBGC guarantees private defined-benefit pensions much like the FDIC insures money deposited in banks up to a certain amount, said agency spokesman Mark Hopkins.

"There is no taxpayer money involved," he said. "It's funded primarily by companies that pay into the insurance fund."

The PBGC guaranty does not include 401(k) or other retirement plans.

The motion filed last Friday said the PBGC on May 10 issued Hancock a notice of determination indicating that Hancock's pension plan was unable to pay benefits when they are due, and "determined that the PBGC should be appointed as statutory trustee."

The motion also said the PBGC plans to have March 31, 2016, established as the termination date of Hancock's pension plan.

"Given the cessation of the debtors' business and the need to provide for continuity of present and prospective retirement pension benefits to Hancock's now-former employees, the debtors have determined that it is in the best interests of their estates to have the company enter into an agreement with the PBGC to terminate the plan," the motion stated.

Any objections to the motion must be filed by Oct. 17. A hearing will take place at the court Oct. 24.

Hopkins said Hancock pensioners should not experience a glitch in their pension benefits as the switch is made from Hancock to the PBGC delivering the checks.

The PBGC pays pension benefits up to the maximum guaranteed benefit set by law to those who retire at 65 ($60,136 as of this year). The payable amount to those who start receiving benefits other than at 65 have their benefits adjusted to be equivalent in value.

PBGC in fiscal year 2015 paid $5.6 billion in benefits to participants of failed single-employer pension plans. But the agency's deficit increased to $76 billion; it has a total of $164 billion in pension obligations it's picked up,with only $88 billion in assets.

The single-employer program in which Hancock Fabrics falls protects 30 million workers and retirees in 22,000 pension plans nationwide.

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