Toys R Us went bankrupt today. I Heart Radio filed for Chapter 11. This is just another stage of what historians of the future (if there are any) might call The Great America Robbery.
Private equity firms - Bain Capital is one of them - have been taking out loans to buy control of many major retailers and other companies. Then they have their new acquisitions take out massive loans. The borrowed funds are used not only to pay off the loans that the equity companies took out to acquire the business - meaning that they effectively buy control of the business at the business’s expense - but the rest of the funds are taken by the equity company as profit.
The business is left with the debt, And even if it’s a profitable business (and they usually are, or they wouldn’t have been targeted in the first place) the debt they’ve been saddled with by the equity company is so huge that they simply cannot pay it off. So they go bankrupt.
Often the equity company still owns the real estate. So they’re left with massive profits and empty stores. You might think that they’d rent those stores out. But these are private equity companies. So they set the rent so high that NOBODY could possibly make a profit in those locations. And then they write them off as losses on their taxes.
The result? It's being called the Retail Apocalypse. More and more empty stores. Economic deserts, that can never be used for retail - and all at our expense. Deserts that will keep expanding, because the private equity companies just keep doing the same thing: taking out loans, buying companies, and destroying them. It won’t stop until there’s nothing left for them to take.
Or if the people wake up and stop them.
Private equity firms - Bain Capital is one of them - have been taking out loans to buy control of many major retailers and other companies. Then they have their new acquisitions take out massive loans. The borrowed funds are used not only to pay off the loans that the equity companies took out to acquire the business - meaning that they effectively buy control of the business at the business’s expense - but the rest of the funds are taken by the equity company as profit.
The business is left with the debt, And even if it’s a profitable business (and they usually are, or they wouldn’t have been targeted in the first place) the debt they’ve been saddled with by the equity company is so huge that they simply cannot pay it off. So they go bankrupt.
Often the equity company still owns the real estate. So they’re left with massive profits and empty stores. You might think that they’d rent those stores out. But these are private equity companies. So they set the rent so high that NOBODY could possibly make a profit in those locations. And then they write them off as losses on their taxes.
The result? It's being called the Retail Apocalypse. More and more empty stores. Economic deserts, that can never be used for retail - and all at our expense. Deserts that will keep expanding, because the private equity companies just keep doing the same thing: taking out loans, buying companies, and destroying them. It won’t stop until there’s nothing left for them to take.
Or if the people wake up and stop them.
