As a grocery chain is dismantled, investors recover their money. Worker pensions are short millions

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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.

Image: Washington Post

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.

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The Gun Industry’s Favorite Trick A major gun maker may have declared bankruptcy in order to avoid real change.

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Remington, the weapons giant that produced the semi-automatic rifle used in the 2012 Sandy Hook massacre, declared bankruptcy in a Delaware court filing Sunday. Across social media, people applauded the company’s demise following a very good run, if more than 200 years of profiteering off products with no explicit purpose other than murder can be summed up as good. Like so many gun manufacturers, Remington seems to have succumbed to a sales drop brought on by the election of the gun industry’s self-declared “true friend in the White House,” thus ending the panic-driven gun rush of the Obama era. Just days after the March for Our lives, Remington’s fall appeared as a hopeful sign that the gun industry has real weak spots. That, or an industry titan is just putting on a different shell game this time around.

On Twitter, Georgetown University law professor Heidi Li Feldman pointed out an issue largely uncommented on in other reports about Remington’s Chapter 11 filing. In 2015, one living survivor and the families of nine Sandy Hook victims filed suit against Remington, accusing the gun maker of marketing a war weapon to civilians. A Connecticut court dismissed the case in 2016, but the state’s Supreme Court is currently weighing whether to reverse that decision and allow the case to proceed. The Remington bankruptcy filing stalls the process, halting the case for a period.

“The people who own gun companies really, really do not want to see a precedent established which permits the sort of suit the Sandy Hook plaintiffs are bringing to go forward on the merits,” Feldman told me. “When you file for Chapter 11, you stay any pending litigation. That means the Connecticut Supreme Court isn’t going to hand down their decision while Remington is in Chapter 11. This gives the people who will be running the company while it’s in Chapter 11 a chance to try to negotiate a settlement with the Sandy Hook families.”

Feldman suspects that Remington, in an effort to get the Sandy Hook plaintiffs to drop the suit, might come to an agreement on any number of settlement terms. And while “Remington isn’t going to give away the store, so to speak,” Feldman notes the company may agree to some plaintiff demands as a way of effectively getting ahead of more broad-based regulation in the future. That is, Remington would likely be willing to make a deal as long as it views that agreement as low-risk for its long-term bottom line, and most importantly, a stopgap against more broad-based industry reform.

“If there’s a rising tide of hostility towards the availability of a product, and you want to minimize the chance you’ll be regulated legislatively, one thing that companies do is take the pressure off politicians to enact regulations by making various commitments,” Feldman said. “It’s a shrewd move. Just as an example, gun companies might be willing to commit to, say, age-based restrictions on who retailers can sell guns to in order to take the edge off of social pressure, and therefore political pressure, to regulate the age at which people can buy guns. They preserve more of their market by giving up a little bit of it. If you are a business operating against the background of potential regulation, you may want to avert the pressure for there to be formal legal regulations because that may be more draconian than what you would want. That way, you don’t have to be forced into a more comprehensive oversight regime. That’s what’s really going on here.”

If Remington is able to arrive at a settlement plan that ends the lawsuit brought by the Sandy Hook plaintiffs—who are likely more motivated by mission than money—there are multiple benefits for the gun maker.

“There’s a tremendous value to Remington to having the plaintiffs withdraw the suit. Which means that the issue of whether or not people can generally bring causes of action like the one the Sandy Hook plaintiffs are trying to bring would be put to one side. That’s quite valuable to Remington. It’s worth enough for them to think creatively, especially in light of the galvanization of public opinion against the manufacture and sale of assault weapons, to think about doing some self-regulation that they wouldn’t have thought about even six months ago,” Feldman says.

If the case were to move forward, so would the discovery process. And as Los Angeles Times writer Michael Hiltzik notes, “That process could unearth reams of internal communications that could be embarrassing if they indicated, say, that Remington deliberately structured its marketing to feed a market of young adults harboring fantasies of mass mayhem.”

In the meantime, as Feldman notes, Remington has plans to keep right on manufacturing and selling guns from the soft perch of Chapter 11 protection. While what precisely the company’s future holds is unclear, the example of Colt Holdings Co. might offer some insights. In June 2015, Colt filed for bankruptcy protection. Six months later, in January 2016, it emerged from Chapter 11 with a new government contract to produce M4 and M4A1 rifles for the military and a focus on expanding business and selling more guns than ever.

According to Remington’s court filings, its bankruptcy claim absolves the company of $775 million in debt. The gun manufacturer predicts it will emerge from Chapter 11 by May. Lawyers for the Sandy Hook families have said they do not anticipate Remington’s bankruptcy filing will “affect the families’ case in any material way.” Remington is also involved in another ongoing lawsuit, which charges its Model 700 rifle has a trigger defect that causes accidental shots to be fired. That class action suit is also likely to be affected by the bankruptcy filing, though how is still unclear.

Remington first announced its plans to seek Chapter 11 in February. It delayed its filing after the Parkland shooting, likely reasoning that making the move on the heels of a mass shooting would be a massive PR disaster. But with growing momentum and the impending Connecticut Supreme Court decision, the gun maker needed to make a move sooner than later.

“There’s been a cumulative sense that we may be at a turning point in terms of regulating the gun industry,” Feldman told me. “And it was in Remington’s interest to seek bankruptcy protection and do their reorganization before anything like that happened.”

By Kali Holloway / AlterNet

Posted by The NON-Conformist

Without Toys R Us, 30,000 jobs, a black hole for toy makers

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The demise of Toys R Us will have a ripple effect on everything from toy makers to consumers to landlords.

The 70-year-old retailer is headed toward shuttering its U.S. operations, jeopardizing the jobs of some 30,000 employees while spelling the end for a chain known to generations of children and parents for its sprawling stores and Geoffrey the giraffe mascot.

The closing of the company’s 740 U.S. stores over the coming months will finalize the downfall of the chain that succumbed to heavy debt and relentless trends that undercut its business, from online shopping to mobile games.

And it will force toy makers and landlords who depended on the chain to scramble for alternatives.

CEO David Brandon told employees Wednesday the company’s plan is to liquidate all of its U.S. stores, according to an audio recording of the meeting obtained by The Associated Press.

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6 critical ways Trump slashing Obamacare subsidies could impact you

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President Trump’s promised rollback of Obamacare has officially begun. But what does it all mean? And will it affect you?

The federal government will cut billions of dollars in health-care subsidies to low-income households that were introduced under Barack Obama’s Affordable Care Act, the White House announced last week.

These $7 billion in “cost-sharing subsidies” are the payments the government makes to health insurance companies to offset the discounts on co-payments that low-income consumers have received under Obamacare. The subsidies repay health insurers for the higher cost of the “silver plan” through HealthCare.gov — the individual insurance marketplace operated by the federal government and set up under Barack Obama.

The cuts in subsidies may actually hit the middle class the most

Insurers already put insurance premiums up 20% this year in anticipation of the President’s decision to end these subsidies. However, in several states, including Indiana, insurance companies spread their rate increases, so middle-class people on individual plans will likely see a double-digit increase in their premiums next year.

“People who don’t qualify for premium subsidies for cost-sharing reductions, but are also in the individual market because they don’t have employer-sponsored coverage — early retirees who aren’t yet eligible for Medicare or higher-earning freelancers — will be negatively affected by higher premium costs,” Susan Nash, partner at Winston & Strawn LLP in Chicago, Ill.

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Once fabled Atlantic City hits free fall

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Image: ob Deutsch, USA TODAY

This summer, even Pinky is blue.

That’s Pinky Kravitz — the Voice of Atlantic City, Chairman of the Boardwalk, the New Jersey city’s biggest and oldest booster, a man who is relentlessly, famously, sometimes improbablypositive.

“Yes, I’m discouraged,” he admits. He turns 87 on Friday, still at the mic of his daily radio show, Pinky’s Corner, after more than 55 years on air. “Who wouldn’t be discouraged with so many people being thrown out of work? People are saying ‘What are we going to do? Where are we going to go?”’

The problem: Casino gambling, which when legalized four decades ago was supposed to help Atlantic City reclaim its pre-air conditioning, pre-jet travel, pre-Las Vegas glory, is besieged by out-of-state competition.

Pennsylvania, Delaware, Maryland, Connecticut, now New York State — “We never thought we’d be surrounded,” he says.

But even in the years when buses rolled in from all over the East Coast, gaming wealth never spilled very far into the shabby neighborhoods in the casinos’ shadows. Gaming tax revenues only bolstered the bankrupt local politics.

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In Shepherding Detroit Bankruptcy, Lawyer Tackles a Job He Didn’t Ask For

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Image: Spencer Platt/Getty Images

Kevyn D. Orr, the man who must now revive Detroit, commutes each week from Maryland to a cavernous old office building here that seems to dare him to succeed: the former headquarters of a company, itself recently in bankruptcy, that once sold more than half of America’s cars — General Motors.

His office, on the 14th floor, is sparsely furnished, but in the stack of papers on his desk he keeps a few photographs — of New York City at its financial low in the 1970s. Gritty streets that look, he says, like some of Detroit’s unlit, forgotten neighborhoods today.

“Anytime somebody says it can’t happen, I whip those pictures out and say, ‘Oh, don’t you bet against it,’ ” Mr. Orr said the other day, not long after a federal judge allowed Detroit to become the nation’s largest city ever to enter bankruptcy. “Let me show you what can happen.”

Mr. Orr, 55, who has never run for political office, finds himself in an extraordinary role. He holds power even more concentrated than that of the emergency control board that intervened when New York City was teetering near bankruptcy, an unelected lawyer chiefly responsible for the reinvention of a major American city in decay. And there’s a deadline — 10 months.

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The Bankruptcy and Privatization of Detroit Is a Terrifying Preview of What Republicans Want to Do to the Rest of the Country | Alternet

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Mitt Romney should be proud of what’s happening in Detroit.

That’s because during his time at Bain Capital, he perfected the type of glorified extortion tactics Rick Snyder and Kevin Orr are using right now rob city workers of their hard-earned pension plans.

When Mitt was running Bain during the 1980s and 1990s, the company made its money by forcing companies into debt and then robbing them blind for every last bit of cash they had.

Bain would take out a loan for, say, a billion dollars. It would then use that billion dollar loan – its leverage – to buy a company. But instead of paying back that billion dollar loan itself, Bain would dump it on the company it just bought. In other words, Bain would make the company it just bought pay for its own acquisition.

And where would that company get the billion dollars to do that? Well, good old Mitt would say that it got the money by eliminating fraud and waste. But in reality that money came from stripping the company of its assets and converting them into cash.

It came from taking employee assets – like pensions and decent paychecks – and converting them into cash to pay for the debt, and even converting future assets – the viability of the company itself – into cash to pay for the debt.

It came from gutting retirement funds and firing workers.

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