Saturday, December 29, 2018

Sun Capital, Vulture Capitalists

Another example of the free hand of the market throttling workers:
Once the Marsh Supermarkets chain began to falter a few years ago, its owner, a private-equity firm, began selling off the vast retail empire, piece by piece. The company sold more than 100 convenience stores. It sold the pharmacies. It closed some of the 115 grocery stores, having previously auctioned off their real estate. Then, in May 2017, the company announced the closure of the remaining 44 stores. 
Marsh Supermarkets, founded in 1931, had at last filed for bankruptcy. 
“It was a long, slow decline,” said Amy Gerken, formerly an assistant office manager at one of the stores. Sun Capital Partners, the private-equity firm that owned Marsh, “didn’t really know how grocery stores work. We’d joke about them being on a yacht without even knowing what a UPC code is. But they didn’t treat employees right, and since the bankruptcy, everyone is out for their blood.” 
The anger arises because although the sell-off allowed Sun Capital and its investors to recover their money and then some, the company entered bankruptcy leaving unpaid more than $80 million in debts to workers’ severance and pensions.
For Sun Capital, this process of buying companies, seeking profits and leaving pensions unpaid is a familiar one. Over the past 10 years, it has taken five companies into bankruptcy while leaving behind debts of about $280 million owed to employee pensions. [snip]
 “These private-equity firms buy a company, plunder it of any assets, and then send it into bankruptcy without paying employees,” said Eileen Appelbaum, an economist at the Center for Economic and Policy Research who studies private-equity transactions. “To anyone but a bankruptcy court, this looks like a swindle.” (our emphasis)
At a minimum, with a new Democratic House, legislation reforming bankruptcy laws to keep companies like Sun from shedding their pension obligations would finally break through Republican obstruction and force the Senate's hand. Let's see how Senate Republicans (and Individual 1) tell blue- collar workers who face the prospect of not having their pensions funded as promised, "Sorry, suckers.  #MAGA!"

By the way, what kind of person runs this social Darwinist, Randian operation, you ask?
... The public face of the firm is [Marc] Leder, a co-owner of the Philadelphia 76ers basketball team and the New Jersey Devils hockey team. Noted for his extravagant parties and yachting expeditions, he has been dubbed by tabloids as “the Hugh Hefner of the Hamptons.” 
Politically, he may be best known for hosting the Boca Raton, Fla., dinner where presidential candidate Mitt Romney made what became infamous comments about the “47 percent of the people . . . who are dependent upon government, who believe that they are victims.”  (our emphasis)
This is an in- depth read, and well worth the time. 


One Fly said...

Been going on for a long time. To think it will change is being very naive.

Early 80's the best and one of the most successful airlines based in Colorado (Frontier) literally had its guts ripped out.

Green Eagle said...

No surprise that Mitt Romney's name should show up in this article, since Romney's company, Bain Capital, is virtually the poster child for this sort of vampire capitalism.

W. Hackwhacker said...

Green Eagle - absolutely. Shared DNA.