They’ve been doing the same thing to Hospitals for years…
Well this explains why a bunch of hospitals went bankurpt in MA recently. What a horrible way to make money.
Yup, the CEOs are trying to blame covid, but regarding NE Sinai in Stoughton:
The healthcare company blamed “skyrocketing expenses” related to labor, material costs due to inflation, and lingering effects of the COVID-19 pandemic on its decision to close the hospital. Steward also said that it owed about $50 million in unpaid rent.
No I heard it’s endless shrimp that did it
It could actually be both; the equity group bought it, sold the land to itself (a subsidiary), used rent to extract money from the business as it was going down. Then they sold the business to a Thai company that sourced their shrimp, with Red Lobster buying at a loss. Once the financials got too bad, they had Red Lobster file chapter 11 so its debts were written off, but the equity group & Thai company get to hold on to the money they got through the process. I can’t verify this is exactly what happened, though, take what I’m saying with a grain of salt.
A hedge fund bought Red Lobster.
Sold all of the ladder (so the hedge fund no longer owns the land).
The people the hedge fund sold the land to jacked the rents (because the hedge fund couldn’t have, since they don’t own the land).
And since the hedge fund still owns Red Lobster, they screwed themselves over.
Right? That’s how this reads.
You might think bankruptcy screws the hedge fund, but it doesn’t. Bankruptcy lets them drop a bunch of debts and obligations caused by sucking all of the money out of the rest of the changes, so they get stuff and don’t have to pay for a big chunk of it before they eventually offload it to some other company.
The whole thing is vulture capitalism.
This is it right here and this scenario was most likely the plan from the outset, they planned on this and orchestrated it.
Isn’t this exactly what happened to Toys R Us as well? Bought up by a hedge fund, saddled with millions of dollars of debt to funnel its value to the hedge fund, then bankrupted and sold off for a pittance, laundering all the profit and wiping the debt away like it was never there. All while putting tons of people out of work.
It’s crazy how a corporate entity can own a company, sell off everything that makes it valuable, and then not pay a dime when said company inevitably goes bankrupt.
Welfare, bankruptcy, and avoiding legal obligations are all apparently fine for corporations, but not people.
The hedge fund could have easily sold to a “separate” entity, legally, but still have been in cahoots or direct control to fuck the company for profit. I don’t know any of the details here, but the same sort of thing happens all the time. Capitalism is full of white collar crime that is simply allowed to happen.
They are allowed to sell the land to other entities controlled by the hedge fund or their cronies.
Which is how they run the business for short term profit. This is confusing, but it’s a thing. It being confusing is half the point, because if all the average Joes out there understood how it all really worked, they’d demand reforms so fast your head would spin. It’s essentially a paper vehicle for transferring non fungible value into money in the bank, and then using chapter 11 protections to bilk the other creditors (sometimes including employees with bounced paychecks). They can then sell the Red Lobster business again (probably at what looks like a huge loss, which they can then write off their taxes, to offset profits from other entities they own). Then they can lease the land to the new business owners. Or they can restructure Red Lobster in some other way that allows them to keep squeezing profit out of it (converting to franchising, then finding suckers to buy the individual locations, for instance).
In this whole process, they’re probably raising food prices while lowering quality of both ingredients and service and deferring essential business expenses (like maintenance and equipment upgrades). Because the money is disappearing into rent and the business looks like it’s struggling.
Source: I used to be a business analyst for a VC company.
They’ve basically siphoned the businesses assets out into cash for themselves, a little bit at a time.
Owning Red Lobster might sound like a cool idea but imagine if you were a hedge fund and you could own the equivalent of the value of Red Lobster in the form of cold hard cash money.
(this hypothetical requires you to abandon all human empathy or long term ethics)
Not a little bit at a time. When they sold all land they would have paid out fat dividends and fees due to the huge profit windfall.
And so raised rents on themselves.
They’re killing the company so they can feast on the carcass. I get it; it’s not like it was a thriving chain with a lot of prospects for future growth. I just think the title of the article implied something different than what’s really happening.
Private equity strikes again: https://youtu.be/z5PLEZiSZVw
Ah yes, a tale as old as when this country started fucking letting companies do that in the first place.
