Basically, the company had to pay for its own buyout when private equity firms KKL, Vornado, and Bain bought the company for $6.6 billion, mostly with loans.
Because the company then had to pay off those extreme loans, they were forced to sell off their assets and property, which they leased back from the very private equity firms that now owned them.
The same thing happened more recently with Red Lobster and JoAnn Fabrics.
So the Equity Holders (The Private Equity firms) were largely shielded from risk as they had taken out billions in dividends and they had a small equity state relative to the debt meaning their downside was limited.
The creditors (large banks) were left holding the bag, but they’d had years of interest payments so they wrote off the rest and likely still made some profit.
Employees, suppliers, and landlords. Employees lose their jobs, suppliers get pennies on the dollar for what they’re owed and landlords might have got some money but still not all.
So in short it was the banks, but don’t forget they had years of interest payments and after all they took the risk.
Well, I mean, banks kind of ‘invent’ the money which they hand out as loans…so what do they care, really?
When the pile of bad loans gets to big, they sell those bundled as loot boxes to other banks. When that pile starts stinking too much, they are too big to fail and get bailed out. That’s the circle of life 🪇🎶
Welcome to the house of cards that is globalisation and capitalism.
This is assuming that the landlords aren’t also the private equity companies as well. So far as I can tell in long term care/assisted living/skilled nursing facilities, the same parent company owns everything, but the food branch is separate from the nursing branch, is separate from the physical rehabilitation branch, is separate from the admin services, and since they are all separate from the building branch, they are all operating “at a loss since” they have employees to pay. All the money goes to the building branches and everyone else gets told to do more with less.
The banks can also technically short the stock as well once the buyout was public, knowing how shit the deal was they can make money on the downside at the expense of all the pensions, 401ks etc that had initially bought the stock. There also isnt a limit that prevents shorting the stock more than shares are in existence. Hence why the gamestop situation was close to breaking the whole stock market a few years back when they started turning everything around for the companies bottom line. With the stock now able to make it think a bout a billion more shares over time the out for the short side has been sort of given without completely nuking the market. But as when the shares are diluted is up to the board it allows gamestop to take advantage of the short side to create more cash on hand for themselves threw timing their market offerings to coincide with when swaps that are housing those shorts come due. In the toys r us case the executives and board were happy to take their golden parachute from the buyout and let ordinary people’s pensions and 401ks carry the bag for them in the form of the stock going to zero and eventually being delisted from the market.
Not sure this applies here as it was a private buyout meaning that there would be no stock to short.
They could have shorted it before the buyout to get a better deal, but the banks didn’t buy it the just lent the money.
Also shorting before could be seen as insider trading, right? Not that something being illegal means it wouldn’t happen, but feels like that would be hard to hide.
So we make interest illegal and the whole scam falls apart, got it.
and if you do that most of the economy fails because no one wants a bond that does nothing
The current economy sucks anyway. Houses as investments, line-go-up disposable consumerism, rent-seeking, it’s all fucked if you aren’t born on top.
seems fine for anyone that already has a house, like everyone should (for hundreds of years)
Sadly the only way is a lot more Luigi’s. If more CEO’s start getting wigged off maybe they’ll lobby for change.
Just sad that most people have it just good enough to not want to risk prison forever to murder someone, although if I could get away with it I’d have no issue in pulling the trigger on these ghouls.