AS JUDGE DECIDES FUTURE OF SHOPKO BANKRUPTCY PLAN,
EMPLOYEES SEND LETTER TO COMPANY EXECS DEMANDING SEVERANCE
Shopko employees call for fund benefiting employees impacted by liquidation
NATIONWIDE — Today, as the U.S. bankruptcy court decides the future of Shopko’s Chapter 11 plan, nearly 700 Shopko employees are demanding private equity firm Sun Capital Partners take responsibility for destroying the 58-year Midwestern retailer. In a letter addressed to Sun Capital’s executives, Shopko employees demand that the private equity firm set up a fund to pay the severance of all 14,000 employees impacted by Shopko’s liquidation.
Shopko employees’ drive for severance pay builds on the efforts of the movement of Toys ‘R’ Us workers who fought for and won a historic $20 million hardship fund from KKR and Bain Capital, who caused the bankruptcy of their employer. The last few years have seen a wave of private equity-driven retail bankruptcies in addition, including Payless ShoesSource, Gymboree and Charlotte Russe. Tens of thousands of jobs have been lost, and working families across the country have lost their livelihoods, healthcare, and, in many cases, due severance.
In the letter addressed to Sun Capital’s Co-CEOs Rodger Krouse and Marc Leder, Shopko employees write:
In 2005, we watched anxiously when Sun Capital bought Shopko in a leveraged buyout that loaded $1 billion debt onto our company. You then sold 178 Shopko properties for $815 million in a sale-leaseback that created unnecessary additional financial burdens on our stores. As our company struggled under overwhelming debt, you made sure to pay yourselves dividends, forcing Shopko to take on additional liability. Now Shopko is liquidating and 14,000 Shopko employees and our families are being thrown into financial crisis.
Trina McInerney, a 12-year Shopko employee in Dubuque, Iowa, said: “I’m working hard to help Shopko wind down, even though I don’t know what’s going to happen to me after our store closes. Every single Shopko employee deserves severance. Sun Capital took our jobs, our health care, and our dignity down with the company. They need to take responsibility for their greedy actions.”
In 2005, Sun Capital bought Shopko in a $1.1 billion leveraged buyout. It then collected hundreds of millions in dividends and fees over the years, even as the retailer faced mounting financial woes and insolvency. A group of Shopko employees with severance claims have retained Jack Raisner of Outten & Golden LLP. Mr. Raisner also represents former Toys ‘R’ Us employees in their class-action severance claims in bankruptcy court.
Facing massive layoffs, Shopko employees are joining thousands of others from Toys ‘R’ Us, Sears, and Kmart around the country to call for accountability from Wall Street private equity firms and hedge funds, whose predatory strategy to extract short-term profits from America’s biggest retail companies has resulted in a job crisis in the industry, impacting hundreds of thousands of working families in communities across the country.
You can find the full text of the letter here, or in the attachment. The letter’s signatories are available for comment upon request. Please contact Taylor Campbell at (202) 854-9571 or [email protected].