![Shoppers leave the Bed Bath & Beyond store in Danvers.](https://cloudfront-us-east-2.images.arcpublishing.com/reuters/LFGCHHTFNVLFFO3X4FTKDK5W3Y.jpg)
A shopper leaves Bed Bath & Beyond after the company declares bankruptcy in Danvers, Massachusetts, on April 24, 2023.REUTERS/Brian Snyder/File Photo Obtaining license rights
Sept 14 (Reuters) – Employees of the former Bed Bath & Beyond told the committee that oversees the company’s 401(k) retirement plan on Thursday after the furniture retailer filed for severance benefits. , filed a lawsuit alleging that its “imprudence” cost it millions of dollars. bankruptcy.
The proposed class action lawsuit, filed in federal court in Newark, New Jersey, alleges that Bed Bath & Beyond closed its 401(k) plan on August 1, more than three months after it sought Chapter 11 protection. It all stems from the fact that it ended.
Former employees said MassMutual’s “guaranteed investment accounts,” which they thought had little risk, suffered 10% losses and lost more than $5 million as rising interest rates eroded the value of the underlying investments. .
They say the 401(k) committee violated its fiduciary duties by failing to replace the account with similar investment options, such as money market funds or stable value funds, that have less principal risk in the event the company goes bankrupt. claimed to have done so.
A lawyer for Bed Bath & Beyond did not immediately respond to a request for comment outside market hours. A spokesperson for the company overseeing the termination of the 401(k) plan did not respond to a request for comment.
Overstock.com (OSTK.O) was acquired and now operates the website under the name Bed Bath & Beyond. The company is not a defendant, and a spokesperson said it was not involved in the 401(k) termination.
In a guaranteed investment account, the insurance company typically invests in stocks and bonds and pays a fixed return to the investor.
MassMutual accounts are invested primarily in long-term bonds, which could decline in value if interest rates rise, former employees said. It also said MassMutual has the right to make up its losses if the contract is terminated.
According to the complaint, Bed Bath & Beyond knew its business model was unviable as of 2019 and replaced accounts in 2020 and 2021 before interest rates started rising. He said there was “ample opportunity”.
Doing so “would have allowed us to terminate the MassMutual agreement with notice and avoid the risk of planned losses that could result from BBB’s bankruptcy and the decline in the value of GIA’s underlying portfolio.” the complaint states.
The lawsuit seeks to recover all losses caused by violations of the Federal Employees’ Retirement Income Security Act, which generally protects 401(k) investors.
The case is Harvey et al v Bed Bath & Beyond Inc 401(k) Savings Plan Committee et al, United States District Court for the District of New Jersey, No. 23-20376.
Report by Jonathan Stempel in New York.Editing: Diane Craft and Christopher Cushing
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