The Federated and Allied department store groups may get quick approval when they ask a U.S. Bankruptcy Court judge Thursday for permission to continue paying employee benefits, the U.S. trustee handling the case said Tuesday. The companies also hope for quick approval to use $700 million in interim financing from New York banks. U.S. Trustee Conrad J. Morgenstern said in his view the requests by Federated Department Stores Inc. and Allied Stores Corp. are necessary in order to assure continued funding of benefits that the companies' 100,000 employees nationwide are expecting. The benefits include health and education plans, disability insurance, workers' compensation, bonus plans, assistance for employees troubled by drug and alcohol abuse, and 401K retirement plans funded by payroll deductions which serve a total of 44,461 Allied and Federated employees. Also among the benefits to be paid are merchandise discount plans for 8,650 retirees who terminated employment with Allied or Federated before the Chapter 11 filings. Those plans generate additional sales for the companies, Morgenstern said. Morgenstern said he and his staff have been examining the proposals to ensure they are appropriate and adequate. ``I think all of these requests are entirely appropriate and necessary in order to have a company such as this, which is so people-oriented, keep functioning at the high level of morale they strive to achieve,'' Morgenstern said in a telephone interview from his Cleveland office. ``Our office will not be in opposition to those requests.'' Federated and Allied, the American retailing divisions of the Canadian company Campeau Corp., filed Chapter 11 reorganization petitions Jan. 15 in Cincinnati to obtain court protection from creditors. The Cincinnati-based retail companies listed $7.7 billion in debts. Under the Chapter 11 filing, the companies must obtain the approval of U.S. Bankruptcy Judge J. Vincent Aug Jr. for paying operating expenses and other bills. Morgenstern's office is assigned to assist federal bankrupcy courts in Ohio and Michigan. His staff is to attend Thursday morning's hearing in Cincinnati before Aug, along with lawyers for Federated, Allied and creditors. Federated and Allied also filed a motion Tuesday seeking Aug's approval to use interim financing money from banks. New York's Citibank is the chief source of Federated's $400 million in loans, while Chemical Bank of New York is the major lender providing $300 million for Allied. Carol Sanger, a spokeswoman for Allied and Federated, said the companies hope for quick approval. ``Most of this is housekeeping stuff,'' Ms. Sanger said. ``It's customary for debtors, soon after they file under Chapter 11, to ask the court for authority to pay certain prepayment claims,'' Morgenstern said. Morgenstern said he thinks Aug may give swift approval for the employee benefits, but may take longer to approve the financing requests. Aug has declined to be interviewed about the case, which represents the largest Chapter 11 filing in American retailing history. The parent Campeau Corp. and the retailers have been struggling with debt accumulated when Campeau bought Allied in 1986 and Federated in 1988.
