1251
Should have paid them back in Geoffrey Dollars.
this post was submitted on 29 Sep 2025
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I highly recommend the book, 'Bad Company' by Megan Greenwell, which covers this exact topic. Great read.
Why did they have to pay off the loans that were used to buy them? That’s something the buyer should be responsible for.
The exact workings im not familiar with but it's called "leveraged buyout" where the net worth of the firm which is bought is the collateral.
So .. you buy firm A with money you lended. When the sale gors through all belongings of firm A are yours! So you sell them off, you know what? You want to make a profit so you sell EVERYTHING.
Now firm A is but a husk of it's former self. So now is the time to put it in some holding company or something. Now the husk of firm A is indebted to you.
Oh noes! It goes bankrupt! With your investment firm as the biggest lender to it!
Probably because the C suite assholes who negotiated the buyout agreed to place the burden of the loan on their own company and shaft their employees. It's basic capitalism, really.
Basic? It seems this kind of wizardry only happens to companies who are in their own kind of abomonative category. I've never seen this happen to small to large businesses. They are also capitalism, that doesn't make sense
I think Kmart and Sears are in this list, too, along with Bed, Bath, and Beyond and even some hospitals. There's nothing private equity forms won't do to make a buck at the expense of a once thriving company or even people's healthcare.
Often private equity is invested in their competitors. One of the problems of rich people having ungodly sums is they like to "invest" in competitors and sell them for parts so they can raise prices.
That's why the Canadian toys r us is doing great.
Too bad we can't say the same for Sears
I generally feel like leveraged buyouts for numbers into the billions are just inside jobs for those selling.
Stay with me for a sec.
So the seller makes a closed door deal with the "buyer" to funnel money back to them personally after the sale is done. So in this case, say, they commit 3.6bn to the "buyers" and pocket 3bn for themselves. Almost the entire purchase is leveraged, with the expectation that it will become unsustainable and go bankrupt shortly after the purchase.
The buyers don't really give a shit, they'll write it off, collect whatever they can from insurance, etc. They didn't really want to company anyways, so they let it fold.
The money they took home from the deal with the seller is entirely theirs, the company bears the weight of the debt and the consequences of defaulting on the debt, so the execs that made the move are basically free and clear.
Everyone wins, except, you know, the poors who work at the purchased company, the banks, who don't give a shit, and insurance people, which... Nobody gives a fuck about them...
At the end of the day, the execs of the purchasing company get rich, the sellers get rich, and that's the fucking point.
If the sellers instead just closed up shop, they would get maybe a fraction of the money they would from selling it, mainly in selling off assets... It would be a pittance compared to this scheme.
All they need to do is find someone they can buy out the morals of, to complete the deal. This is surprisingly easy in the corpo world.
Ok, but who is providing the loans for the buy out. When they default on the debt someone or some thing is not getting paid. If that were the case eventually no company would loan money for a leveraged but out right?
Bear with me for a bit, because i don't understand these schemes.
If the sellers instead just closed up shop, they would get maybe a fraction of the money they would from selling it, mainly in selling off assets… It would be a pittance compared to this scheme.
How would the sellers get more money from this scheme? Isn't liquidating company assets are basically what the buyers (the private equity firms) did anyway?
collect whatever they can from insurance
How does the insurance companies keep falling for these? This has happened several times, and insurance companies aren't known for being charitable.
Every time I read something like this, it makes me want to burn money.
"Millennials are ruining the [_] industry! How dare they-"
Oh right, it was capitalist greed all along. Excuse me while I shed a tear for your precious local Applebee's as you keep voting for the people who enable these acquisition monopolies, lmao
Back to the good old corporate raiders like Lorenzo. For a while there we kept them on a leash. Now with the Land of No Consequences and leashes becoming meaningless these leeches are free to buy and pillage as they see fit. The housing market is gonna be destroyed next, wait until they start selling the homes off to shell companies and taking loans to pay for the deteriorating properties and property taxes (which trump has floated getting rid of to keep these hoarders afloat even longer).
Everything they did was to line their pockets and destroy the company and leave creditors holding the bag. They should ban buying with loans, no taking loans against acquired companies for X years. The sale and leasing of assets back by the same owners stinks.
This kind of buyout should be made illegal.
My first ever job as a high school kid was stocking the shelves at Toys R Us; I have found memories of that place, and those people to this day.
Fuck Mitt Romney, I will never forgive him for this treachery.
I watch the YouTube channel "Company Man" that does a bunch of interesting business stories. 95% of the "Decline of (brand)" or "Rise and Fall of (brand)" videos are because of leveraged buyouts.
A group of idiots borrow billions of dollars, throw the unrecoverable debt onto the books, slowly killing the company, and then it's dead.
Who loans this money? How does that work? I understand the rest of it about being a bastard who collects millions in salary and bonuses while driving a company into the ground. I just don't understand where the money comes from, or why.
Oh it is real simple. Imagine you have a really nice truck that is all jacked up with a lift, big tires, light bar, supercharger, etc.
I want to buy it and you want $10k for it since it is an older model and most of it's worth is from the accessories. The problem is I don't have $10k. I only have $2k.
This is where the magic happens. I find some someone who will buy all your accessories for $8k. I make a deal, let me strip your truck and I will pay you $10k for it.
You agree and I come over, take off all the accessories and then sell them for $8k and then buy your truck for $10k.
The truck is pretty worthless at this point without wheels or anything, but I can sell it for about $3k. Well, I ruined the truck and made a thousand bucks. This is a silly example of how they get the money.
It may be U.S. plutocrat strategy to weaken political enemies by killing their companies.
Consider Microsoft destroying Nokia and their Linux phones to benefit fellow American companies Apple and Google.
Consider the Destruction of OkCupid as an attack against its liberal-skewed user base.
Consider Microsoft destroying Nokia and their Linux phones to benefit fellow American companies Apple and Google.
I've considered it, but I do think it was a huge blunder that was planned differently. They invested a bunch of money in Windows Mobile, had a partnership with Nokia and then bought their mobile business... And then they just gave up, handling their competitors in other markets (Apple being a competitor to Windows and Google at the time being already a competitor to Office) a win. I suspect they actually had faith in Windows Mobile and wanted to fuck up Nokia and buy their phone business so they could sell Windows Phones.
The best book I've read about private equity is called Songs of Profit, Songs of Loss by Daniel Souleles. It's an ethnography of private equity.
Private equity is the logical extreme of the idea of shareholder value. Companies are bought, stripped for parts, and mined for resources. The money comes from wealthy people and institutional investors like university endowments, pension funds, etc, and some years it is a very high-return investment. Other years, not so much, see the relationship by the University of California and Blackstone as an example in recent years.
TIL: stock buybacks were considered insider trading before Reagan made them legal
Is there anything that Reagan hasn't fucked?
He died before Epstein Island was a thing, presumably.
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The entire investor community is filled with shitbags.
This is like me taking out a loan to buy a car and then expecting the car to make the payment.
And since all the debt is on the company and not the people/organization who bought the company, they don’t suffer any of the repercussions of defaulting on the loans. Why this isn’t illegal is beyond me.
This is like me taking out a loan to buy a car and then expecting the car to make the payment.
It's even worse than that. Imagine you bought a car from a dealership and were making monthly payments on it. I take a loan to buy your debt from the car dealership, sell your car to pay my loan off, and then expect you to continue making your monthly car payments to me. You file bankruptcy to get out from under the debt, but by then I've pocketed months or years of your car payments and come out with a tidy profit.
And then I do it to hundreds of other people, over and over again, as long as other rich people are willing to loan me money. Which of course they are, because running companies into bankruptcy is incredibly profitable.
Something something road to serfdom.
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What will really shift your thinking is finding out that they have done this to almost all the hospitals in the United States, which is part of the reason healthcare costs have skyrocketed.
Hospitals need more to pay their leases, health insurers need to pay more to feed the hospitals machine, premiums go way up/more services restricted/more cost share (copay etc)
If you think it’s shitty that consumers can’t own anything anymore, they stole your wellbeing services while you were bitching about how little is still on Netflix these days
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Did you know companies can take out loans to buy their own stock to raise the value.
The fact that they can buy a company by going into debt and immediately transfer the debt to the company is fucking insane. Maybe we need to figure out how we as individuals can do that and just fucking crash the lending industry entirely? Can I make my house buy itself for me and then "whoopsie, the house can't pay the bills, guess it will file for bankruptcy and hand me a big ol' stack of cash".
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Yeah?
Isn't that the entire thing that private equity firms do? Buy up companies, sell all their assets to the private equity firm, then have them lease it all back for insane amount until it's bankrupt.
Makes a whole lot of short term profits, destroys the company and it's employees. No fucks given
Private equity firms are a cancer (amongst many cancers) on humanity
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below is a reply to a comment I made below, pasting here as I find it crazy how this went down and is allowed.
For those curious I did a little digging. I’m on mobile so won’t be going in and out to add company names etc.
Basically, the private equity firms got together and said let’s buy Toy R Us for $6.6B but we only want to use say 300M of our own money and get a loan for the rest.
Then they bought Toys R Us but made them sell all assets to equity firms which then leased them back to Toys R Us so they could pay back the loans. This means Toys R Us are paying hundreds of million a year to cover loans and can’t put that money into making a better business.
The private equity firms also made Toys R Us issue dividends in the hundreds of millions so private equity can make money.
In the end private equity walked away with over $1B in profit whilst Toys R Us declared bankruptcy with $5B still left to pay.
What a fucking insane system. Like how many people lost their jobs so these ghouls could make some extra cash off its downfall.
And people think I’m crazy for making my life harder by not shopping at places like Amazon or being a pirate and not giving money to Netflix etc.
I feel I am living in crazy land. Like the Uk has all our pensions and shit tied to the damn stock market, ensuring we can never really leave this system.
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Toy R Us is still a thing in Canada, you can just go there and get your kid legos like its 2002
It's still kind of a thing in the USA, you just have to visit a Macy's department store at the local dying mall. The Toys R Us is a small section in the back.
Which is far more depressing than if the brand was outright dead.
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