Basically, the company had to pay for its own buyout when private equity firms KKL, Vornado, and Bain bought the company for $6.6 billion, mostly with loans.
Because the company then had to pay off those extreme loans, they were forced to sell off their assets and property, which they leased back from the very private equity firms that now owned them.
The same thing happened more recently with Red Lobster and JoAnn Fabrics.
This is one of those situations where it once again shows that:
Selling property to rent it back should also be super illegal. Is there ever a time this makes sense. If you want to sell land to profit, close the fucking place, there’s no way it’ll suddenly be more profitable while renting.
Not defending PE, but there are situations where this type of thing would make sense. If the rates were low enough a company could cash out it’s property value using something like this and use the cash for an expansion, to make a moonshot investment, or maybe as a last ditch to survive in a downturn.
That’s not what’s happening here, but turning real assets to cash through debt to then invest in the business is a decent tactic.
I see your point, though I don’t know of an example (they’re doing it with Hospitals now too).
Still if you have so many locations that you have enough capital in their land, it seems like closing the locations that you’d sell would make a moonshot more likely to succeed.
the government rarely wants to incentivise direct job loss
It would make sense for me to sell my apartment and rent it back because I get fucked by ODSP if I take a roommate while I’m an owner and I can’t afford to live here alone.
It would make sense for an entity that needs to make use of their equity for other things. Many many individuals and companies mortgage their properties or get secured loans. That’s basically the same thing.
A company is not somebody, it’s a thing, like a home or a car that you have no problem getting a loan to pay for. Or maybe it’s special because we’re talking about a means of production? C’mon. Say it. Say “means of production.”
No, no companies are people. Buying and selling them is slavery.
The Supreme Court said corporations are people enough to be protected by the first amendment.
The Supreme Court can say the moon is a person and the sun is God. It can decide what entities it will extend the protection of rights to, but it cannot redefine what a person is outside of its own technical jargon.
Citizens United has entered the chat
The very first words of US law:
1 U.S. Code § 1 - Words denoting number, gender, and so forth
…the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals;
Okay? That’s a definition that only has scope within that specific document and those it governs. Plus, it’s a definition of two entirely different words.
If we had a strong reform minded government, our leaders could oppose these parasites, and then make examples out of those that mistreat our productive companies. Like which of these private Equity douchebags can’t be hit with a crime for something or another? Not a single one, you can get everyone with the tax evasion charges.
We need leaders that protect us from these monied parasites.