[Congressional Record Volume 165, Number 176 (Tuesday, November 5, 2019)]
[Senate]
[Pages S6380-S6382]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                                Pensions

  Mr. MANCHIN. Madam President, I come again to speak about what I 
think of the inequities and unfairness in the system that we have to 
American workers.
  American workers, businesses, and the economy here in the United 
States are the envy of the world and have been for quite some time. 
Throughout the history of our country, our citizens have believed that 
through hard work and dedication, they could achieve the American 
dream. Unfortunately, that is not always the case, as we know.
  Millions of Americans worked hard, played by the rules, and trusted 
the companies they worked for to keep their end of the bargain. That 
bargain is their pension. These pensions are modest and what millions 
of Americans plan to use when they retire in the twilight of their 
lives.
  But for 1.5 million Americans, that security has been pulled out from 
under them. Why, after working hard for years and forgoing a portion of 
their paychecks, which they have invested--this is their money matching 
their employers' for their pension--have they either lost or gotten 
their pensions cut in half? The answer is the current state of 
bankruptcy laws.
  How does this happen? Every payday, 10.6 million Americans put a 
portion of their paycheck into a pension account with a promise and 
trust that it will be there when they retire. These same people forgo 
pay raises, bonuses, and personal retirement accounts because they 
believe their pensions will be there until needed.
  Unfortunately, that trust is often broken when investment firms swoop 
in during the bankruptcy process. They cherry-pick at the remains of a 
company, cannibalizing its most lucrative

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assets, therefore putting profits before the people.
  Through no fault of the workers in America, companies are able to use 
their pension money for whatever they want when they declare 
bankruptcy. Just think about that. All your life, you have been 
working--20, 30 years or more--and you thought it was always secure. 
All of a sudden, through the bankruptcy laws, they are able to take 
your money and use it for whatever they want to now because they 
declared bankruptcy and went through a procedure.
  Under current law, when companies declare bankruptcy, they have the 
ability to use their workers' pension fund to give their executives 
bonuses and pay legal costs and debt. I am going to repeat that one. 
They have the ability to use the workers' pension--your money, workers' 
money--to give bonuses to the executives, who should be held 
responsible for the company doing as poorly as it has done to go into 
bankruptcy, and pay legal costs and debt out of money you put in there 
for 20 years or more.
  For the last few decades, investment firms have manipulated chapter 
11 of the U.S. Bankruptcy Code to destroy union contracts, reduce 
health benefits, and skirt pension obligations to maximize profits. 
Under current law, investment firms can target companies through 
chapter 11 bankruptcy, sell off all the company's valuable assets, and 
leave the pension plan in a worthless corporate shell, while paying 
handsome bonuses to their executives.
  While Congress has sat back and allowed the exploitation that occurs 
through bankruptcy, millions of workers and retirees have lost their 
retirement security. Workers and retirees did not set the amount each 
company contributes to their pension plans, the terms of the plans, or 
the loopholes in the bankruptcy laws. Those actions were all done right 
here in the Halls of Congress. As such, it is now the responsibility 
and duty of Congress to stop the financial engineering and close the 
loopholes of our Bankruptcy Code.
  Let me just talk about one company that affects my State vastly. Last 
week, the largest private coal company in the United States, Murray 
Energy, filed for bankruptcy, making it the eighth coal company in the 
past 12 months to do so. Like so many coal companies before them, they 
plan to skirt their pension obligations and use coal miners' money to 
pay off their debts, give their executives bonuses, and pay off legal 
fees. In the bankruptcy filing, they even labeled coal miners as 
liabilities.
  I don't know about you, but I don't know how any company in good 
conscience could ever label their employees as liabilities. They are 
the ones who make the company, but now they are liabilities. That is 
why they had to go into bankruptcy.
  Murray Energy has contributed 97 percent of the money going into the 
UMWA pension fund annually. With Murray's bankruptcy filing, the UMWA 
pension fund will become insolvent even faster. Once the UMWA pension 
fund becomes insolvent, this crisis will snowball and impact every 
other multiemployer pension fund in America.
  I am going to talk about a couple of cases here to put it in 
perspective. I think everybody will be able to follow this much easier. 
I am going to talk about Sears and Roebuck, which we all knew growing 
up. My mother used to get the catalog way back when, and we used to do 
most of our shopping there.
  This information that I am giving you and I am going to explain comes 
from a complaint filed by Sears itself in the Southern District of New 
York in January 2019. This is the old Sears filing against the new 
Sears--the takeover Sears. This type of financial engineering and 
exploitation occurred at Sears over the past several years.
  After merging with Kmart and being taken over by Eddie Lampert and 
his hedge fund, ESL Investments, Sears started to buy back its own 
shares instead of investing in its already rundown stores. Lampert also 
transferred 235 parcels of Sears' most valuable real estate to an 
investment trust led by Lampert himself and then leased the properties 
back to Sears.
  In 2017, Sears paid the investment trust owned by Mr. Lampert $117 
million in rent for the use of its former property. Under Lampert and 
ESL, Sears closed over 3,500 stores, slashed roughly 250,000 jobs, and 
saw its share price fall from $193 a share in 2007 to less than $1. I 
repeat--$193 a share in 2007 to less than $1 a share.
  After filing bankruptcy in 2018, Sears no longer possessed enough 
assets to pay off its creditors--especially its pension obligation. Now 
those pensions are in the hands of the Pension Benefit Guaranty 
Corporation, which is Sears' largest unsecured creditor, and it owes 
the PBGC more than $1.5 billion.
  Recently, Sears Holdings Corporation filed a lawsuit against former 
CEO Lampert, alleging that he transferred more than $2 billion of cash 
and real estate to himself and other shareholders in the years leading 
up to the retailer's bankruptcy. That has all been done under what they 
consider legal.
  I am going to tell you about one more. This is Friendly's. Friendly's 
is an ice cream corporation, and this information comes from the PBGC's 
complaint opposing Friendly's plan for restructuring. I am telling you, 
this comes from the Pension Benefit Guaranty Corporation, which we run 
in this country--the Federal Government--and they put this complaint 
against their restructuring.
  The same scheme played out with them in early 2000. In 2007, Sun 
Capital Partners, Inc., a private equity fund, purchased Friendly's for 
$337 million. Trying to weather the great recession, Sun forced 
Friendly's to close 63 stores and take a loan from one of the firm's 
affiliate entities. At that point, Sun Capital was both the owner and 
major creditor of Friendly's. That relationship gave the firm leverage 
in its bankruptcy to quickly sell much of Friendly's assets free and 
clear of any pension obligations to one Sun Capital's affiliate. At the 
end of the bankruptcy, most of Friendly's assets were owned by Sun 
Capital affiliate free and clear of any pension plans. Those unfunded 
pension obligations totaled $115 million and are being assumed by you 
and I, the taxpayers, through the PBGC. There is nothing fair about any 
of this that I just explained, no matter how large or how small.

  We are talking about righting a wrong that we have allowed to happen. 
Back in the 1980s, when the bankruptcy laws were changed, I don't think 
there was a Member here who intended for these type of shenanigans--
this type of robbery and thievery to go on in America. It has happened 
for far too long, and we have a chance to change it.
  As the bankruptcy laws continue to allow this type of exploitation to 
remain, there is a low-profile government agency that is pivotal to the 
Federal Government's efforts to protect the pension benefits for 
thousands of American workers and retirees. The Pension Benefit 
Guaranty Corporation collects insurance premiums from companies that 
offer pensions and provides a portion of the lost benefit to protect 
retirees when a pension fund runs out of money. That is an insurance 
program that the Federal Government has backed up, and the companies 
have paid into that thinking they are going to be in good standing.
  Overall, the PBGC covers benefits for about 44 million people--44 
million workers. However, the PBGC has come under tremendous financial 
pressure as more and more companies have shed their pension debts 
through the Bankruptcy Code. According to PBGC, there is a 90-percent 
chance that the union insurance program will run out of money by 2025, 
leaving it unable to protect pensioners in need. If the exploitation 
continues and the PBGC is left holding the check for bankrupt 
companies, taxpayers will, for the first time in history--we taxpayers 
will, for the first time in history--be on the hook for pensions that 
were evasively disregarded in exchange for investment company profit--
or robbery, actually.
  If the PBGC becomes insolvent, taxpayers will be on the hook--listen 
to this figure. We, as taxpayers, will be on the hook for $479 billion 
over the next 30 years, if we allow this to continue.
  That is why I have introduced legislation that will reform our 
bankruptcy laws. It is called the SLAP Act--Stop Looting American 
Pensions Act. That is exactly what we have allowed to happen for so 
long. It would ensure companies can no longer exploit loopholes in the 
Bankruptcy Code to skirt their pension obligations to workers and 
retirees. My bill would change bankruptcy laws to increase the priority 
of workers going into bankruptcy

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proceedings so the workers are the first priority, not the executive 
bonuses and legal fees.
  What we are doing for the first time is making sure the wage earner, 
the worker, is in the front of the line, not the back of the line. 
Right now if a bankruptcy occurs, I guarantee, all of the different 
reorganization groups that come in, all the different financial groups 
will be in the front of the line, and the workers are left with 
nothing. This reverses that procedure.
  It is a sad day when American workers across the country pour decades 
of their life into a company and are denied their pensions due to 
corporate greed.
  I keep hearing CEOs talk about corporate responsibility. Well, I am 
so thankful to hear those words, ``corporate responsibility.'' This is 
a step toward putting those words into action. I would like to see the 
responsible corporate heads of American industry step forward and help 
us with this needed change. We have to put our workers at the front of 
the line, and I would like to see that done sooner than later.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.