(Reuters) - Sears Holdings Corp (SHLD.O) is facing a familiar foe in its bid to sell off the Kenmore appliances brand: the U.S. government body that oversees the pensions for the company’s 100,000 retirees.

Sears Chief Executive Eddie Lampert’s hedge fund, ESL Investments Inc, submitted bids last week of $400 million and $70 million for Kenmore and the department store’s home improvement business, respectively.

ESL hopes to have a final agreement as soon as Aug. 24, which would end Sears’ nearly two year search for a buyer. It is unclear if the Sears special committee selling the businesses will accept Lampert’s offer.

Lampert’s strategy in bidding for the two businesses is to entice another potential buyer to the table, according to a person familiar with his thinking. Barring that, the goal is to help the 125-year-old department store operator continue to fund its operations as it faces a cash crunch, the source said.

But the government agency known as the Pension Benefit Guaranty Corporation (PBGC) plans to use its right to effectively veto the Kenmore sale in order to negotiate a share of the anticipated proceeds from Sears, according to people familiar with the matter who requested anonymity to discuss confidential deliberations.

A spokeswoman for the PBGC declined to comment on the sale of Kenmore, known best for its refrigerators and washer and driers. But she said in a prepared statement, “We continue to monitor Sears’ financial situation.”

Sears declined to comment.

The PBGC move mirrors its own successful tactic last year with Sears, when it won future cash payments from the company in exchange for agreeing to the sale of Sears’ Craftsman tool line.

The PBGC, funded in part by insurance premiums paid by companies, is responsible for covering workers’ pensions if their former employer cannot. When companies face financial distress and are at risk of leaving the agency with a pension funding gap to cover, the PBGC can intervene to protect itself, pushing the employer to contribute more to worker retirements.

The PBGC’s stance could jeopardize Sears’ efforts to raise money to stay in business. The retailer, which also runs Kmart discount shops, is burning through $1 billion to $1.5 billion annually, according to analysts, as it struggles to compete with online retailers such as Amazon.com Inc (AMZN.O) and discount chains including Walmart Inc (WMT.N).

Sears has taken other measures to boost cash, inking a $425 million credit card deal with Citigroup Inc (C.N) in May and selling $290 million in real estate in the first quarter.

Sears cautioned investors last year that it may not be able to carry on as a going concern. The retailer, with $5.2 billion in borrowings on May 5, will aim to keep as much of the cash from the Kenmore sale as it can to help make it through the holiday season, the people said.

Sears retirees’ pensions face their own funding shortfall of $1.5 billion.