The "fast fashion" retailer said it would close stores in Canada, Europe, and Asia but continue operations in Mexico and Latin America.
Eddie Lampert had promised to pay $43 million to former workers.
The bankrupt retailer alleges Eddie Lampert and other investors siphoned off assets for their own gain through fraudulent spinoffs and other deals.
The pension insurance fund is stepping in because “it is clear that Sears’ continuation of the plans is no longer possible.”
The bankrupt retailer's "hand has not changed and the cards it holds are not winning ones," an analyst says.
"This is the inevitable end game of an effective liquidation process that has been going on for many years," a retail analyst says.
Eddie Lampert says the retailer must act "without delay" to address “significant near-term liquidity constraints."
The proposed sale to CEO Eddie Lampert's hedge fund would further his goal of making Sears an "asset light" business.
Amazon's dominance in a growing array of marketplaces could have catastrophic effects.
The lifting of a "ring-fencing" restriction will allow the embattled retailer to raise $407 million to contribute to its underfunded pension plans.
The retailer's Q2 results were "a little bit heartening, but still left some open areas of worry," including another double-digit comp sales decline.
The deal comes as insurers are buying pension plans at a record rate.
