Carter Hawley gets approval for $5 million pension fund payment.

Carter Hawley gets approval for $5 million pension fund payment

Bankcruptcy court Judge James Dooley granted Carter Hawley Hale Stores Inc. permission last week to make a $5 million payment to the company's pension fund. The department store chain was two months late with the payment.

The Los Angeles-based retailer's filing stated if the court were not to grant permission for the payment, "CHH's reorganization efforts would thereby be impaired."

Carter Hawley maintains a pension plan under which about 14,000 of its 24,000 employees are eligible. The pension's benefits were valued at about $112 million as of June 30, 1990, the documents state.

The $5.2 million late payment was due March 15, and was a contribution to the plan for the year ending June 30, 1990.

Knowing that Carter Hawley was two months late in its pension plan payment made some employees uneasy, said Bill Fiore, president of Local 1100, the Department Stores Employees Union in San Francisco. "They don't feel too happy about it."

The union has 900 members who work for Carter Hawley's Emporium subsidiary.

One bankruptcy lawyer said not funding the pension plan was one way for Carter Hawley to raise cash. "They probably used the pension money to buy inventory," said the lawyer.

The documents stated Carter Hawley's tardiness results from its filing for Chapter 11 bankruptcy Feb 11. Carter Hawley is parent of the 43-store Broadway-Southern California department store chain, Broadway-Southwest, Emporium and Weinstocks department store chains.

"Failure by CHH to make the contribution under the pension plan risks termination of the pension plan by Pension Benefit Guaranty Corp., thereby threatening a deterioration in employee morale, productivity and in the quality of service offered to CHH's customers," the documents further state.

Meanwhile, Judge Dooley will decide this week whether to authorize a plan for Carter Hawley to consolidate and shift its credit card operations to Tempe, Ariz. The move would result in a 17 percent reduction in management and staff, Carter Hawley documents state.

"Carter Hawley Hale's credit card and accounts payable operations are currently conducted separately at each of its four divisions. Consolidation of Carter Hawley's credit card and accounts payable operations into one administration center will generate substantial cost savings for Carter Hawley," the documents state.

Carter Hawley has been planning to consolidate its credit card operations and move them to Arizona for about the past 14 months, but the move was hampered by the company's bankruptcy declaration.

The consolidation will generate about $6.2 million in savings by the end of the 1994 fiscal year, while start-up costs will be about $3.1 million, Carter Hawley's documents state.

To facilitate the consolidation, the company also proposes leasing an administrative building in Tempe, leasing and purchasing equipment, and establishing a national bank, a technicality that will allow Carter Hawley to be exempt from complying with certain state finance charge regulations.

The company chose Arizona for its credit card operations because of the state's favorable lease rates, wage rates and employee benefit costs, the documents state.