Judge Allows Allied, Federated to Pay Employee Benefits

A bankruptcy judge today authorized Federated Department Stores Inc. and Allied Stores Corp. to pay employees millions of dollars in benefits earned before the retailers sought protection from their creditors.

U.S. Bankruptcy Judge J. Vincent Aug Jr. approved payments for health and disability insurance, for drug and alcohol abuse counseling, employee educational programs and for a company savings plan. The judge also approved resumption of 20% discounts on sales to Federated and Allied retirees.

Federated and Allied said the programs were essential to maintaining the loyalty and performance of the retailers’ 100,000 employees.

“I view loyalty and good will and morale as an important value in this case,” Aug said.

Federated and Allied are owned by Toronto-based Campeau Corp. The two retailing divisions operate Bloomingdale’s, Lazarus, Rich’s, Jordan Marsh and other major department store chains.