{"id":57,"date":"2017-12-23T08:44:43","date_gmt":"2017-12-23T08:44:43","guid":{"rendered":"https:\/\/cryptorepublic.app\/?p=57"},"modified":"2017-12-23T08:44:43","modified_gmt":"2017-12-23T08:44:43","slug":"private-equity-firms-sued-over-retailer-bankruptcies","status":"publish","type":"post","link":"https:\/\/cryptorepublic.app\/?p=57","title":{"rendered":"Private Equity Firms Sued Over Retailer Bankruptcies"},"content":{"rendered":"

[vc_row][vc_column][tm_heading tag=\u00bbh5″ custom_google_font=\u00bb\u00bb font_weight=\u00bb600″ text=\u00bbPrivate equity firms are seldom sued for their practice of levering companies for fun and profit and not caring much if they leave smoldering wreckage in their wake.\u00bb line_height=\u00bb1.4″][tm_spacer size=\u00bblg:25″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbOne big reason has been that it takes a lot of time and effort to prove fraudulent conveyance, which is layperson terms means continuing to bleed cash out of a company into your own pocket when you know it is a goner. And to discourage these suits, private equity general partners go into the legal version of scorched earth mode to deter other bankruptcy victims from getting bright ideas.\u00bb][tm_spacer size=\u00bblg:63″][vc_row_inner][vc_column_inner width=\u00bb3\/12″][tm_image image=\u00bb875″][tm_spacer size=\u00bbsm:30″][\/vc_column_inner][vc_column_inner width=\u00bb9\/12″][tm_heading tag=\u00bbh5″ custom_google_font=\u00bb\u00bb font_weight=\u00bb600″ text=\u00bbUse psychological pricing methods.\u00bb line_height=\u00bb1.4″][tm_spacer size=\u00bblg:23″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbToday, the Wall Street Journal reports on the outburst of litigation over bankruptcy restructuring plans for private-equity-damaged retailers like Payless Cashways. We\u2019ve discussed how private equity set many retailers up for failure by selling off their real estate at rich, asin inflated prices, giving themselves a nice big payout, and saddling the operator with high lease payments.\u00bb][tm_spacer size=\u00bbxs:30;lg:35″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbBut in the cases the Journal highlighted, the private equity owners resorted to a strategy that had been discredited, that of the so-called dividend recap. The poster child was when Clayton & Dublier acquired Hertz in 2006, loaded it with debt, and made a big dividend payment with the proceeds.\u00bb][\/vc_column_inner][\/vc_row_inner][tm_spacer size=\u00bbxs:30;lg:52″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbMind you, the reason these chains had owned their own stores in the first place was that retail is a cyclical business. Owning a lot of the property you used was a way to reduce overheads and increase odds of survival.\u00bb][tm_spacer size=\u00bbxs:30;lg:68″][vc_row_inner][vc_column_inner offset=\u00bbvc_col-md-6″][tm_heading tag=\u00bbh5″ custom_google_font=\u00bb\u00bb font_weight=\u00bb600″ text=\u00bbDemonstrate the differences\u00bb line_height=\u00bb1.4″][tm_spacer size=\u00bblg:23″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbPayless ShoeSource Inc., Gymboree Corp., rue21 Inc. and True Religion Apparel Inc. were all acquired by private-equity firms during the past decade. Now, lawyers for creditors have questioned whether private-equity firms share blame for the retailers\u2019 financial collapse, in some cases by loading debt on the companies.\u00bb][tm_spacer size=\u00bbsm:30;lg:68″][tm_heading tag=\u00bbh5″ custom_google_font=\u00bb\u00bb font_weight=\u00bb600″ text=\u00bbOffer a money-back guarantee\u00bb line_height=\u00bb1.4″][tm_spacer size=\u00bblg:23″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbIn the case of Payless, investors Golden Gate Capital and Blum Capital, after a leveraged buyout in 2012, over the next two years paid themselves $350 million in dividends\u2014in total putting more than $700 million in debt on the company. In 2016, Payless said in court papers, it had about $2.3 billion in global net sales, and nearly $840 million in debt\u2026\u00bb][tm_spacer size=\u00bbsm:30;lg:68″][tm_heading tag=\u00bbh5″ custom_google_font=\u00bb\u00bb font_weight=\u00bb600″ text=\u00bbTest your offer and price, and be creative.\u00bb line_height=\u00bb1.4″][tm_spacer size=\u00bblg:23″][tm_heading tag=\u00bbdiv\u00bb custom_google_font=\u00bb\u00bb text=\u00bbGymboree\u2019s June bankruptcy filing occurred days after it couldn\u2019t make a semiannual interest payment on debt dating back to Bain Capital\u2019s $1.8 billion 2010 buyout. Public filings show Bain also received fees from Gymboree in the years after the buyout.\u00bb][\/vc_column_inner][vc_column_inner offset=\u00bbvc_col-md-6″][tm_spacer size=\u00bbsm:40″][tm_image full_wide=\u00bb1″ image=\u00bb876″][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

Gymboree\u2019s June bankruptcy filing occurred days after it couldn\u2019t make a semiannual interest payment on debt dating back to Bain Capital\u2019s $1.8 billion 2010 buyout. <\/p>\n","protected":false},"author":1,"featured_media":45,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[26,28],"class_list":["post-57","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-funding-trends","tag-classic","tag-industry"],"views":219,"_links":{"self":[{"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=\/wp\/v2\/posts\/57","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=57"}],"version-history":[{"count":0,"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=\/wp\/v2\/posts\/57\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=\/wp\/v2\/media\/45"}],"wp:attachment":[{"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptorepublic.app\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}