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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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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Posted by The NON-Conformist

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