
Sears Bankruptcy Engineered to Benefit Executives and Stiff Workers - howard941
https://www.nakedcapitalism.com/2018/11/sears-bankruptcy-engineered-benefit-executives-stiff-workers.html
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ianai
This ought to be a teachable moment in labor/market regulation. Imagine how
society would have been bettered had workers not been stiffed? The impact to
aggregate demand is always going to be larger when more people receive income
as opposed to fewer people with larger sums.

Edit-instead, the bankruptcy is engineered to take money away from pension and
laborer obligations and give it out to top executives. Apparently there’s some
regulatory loophole that only allows laborers to be paid out in this situation
if they demonstrate excessively high productivity- and without that management
gets paid. Despite the fact that this same management is responsible for
destroying the company.

Purely infuriating.

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PatentlyDC123
This management came in to save Sears from bankruptcy a while ago and invested
millions in a failing company. Even with this investment, the huge pensions
previously negotiated by labor imposed an enormous financial burden on Sears
that eventually proved insurmountable. Labor may be getting stiffed now, but
they’re also very much to blame for Sears failing.

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charlesism

        huge pensions 
    

Interesting. Out of curiosity, do you know how large the pensions were, per
employee?

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PatentlyDC123
Perhaps "huge pensions" was not the best choice of words. I was referring to
the size of the pension funds in the aggregate and their growth over time
rather than per employee. The CEO (who invested millions in Sears before and
after leaving his hedgefund [0]) stated that $4.5 billion was contributed to
the pension funds since 2005. See [1]. However, even then, the pension funds
are underfunded by $1.5 billion. See [2]. To be clear, I don't place all blame
for the bankruptcy on the pension obligations; I just think it is an important
contributing factor should be mentioned in the conversation. Additionally, the
bankruptcy will be interesting to watch for its comparison to GM back in 2009
(another company with a large pension obligation on its balance sheet at the
time of bankruptcy).

[0]
[https://en.wikipedia.org/wiki/Eddie_Lampert](https://en.wikipedia.org/wiki/Eddie_Lampert)
[1] [https://www.chicagotribune.com/business/ct-biz-sears-
bankrup...](https://www.chicagotribune.com/business/ct-biz-sears-bankruptcy-
pension-default-20181011-story.html) [2]
[https://www.pbgc.gov/news/press/releases/pbgc-statement-
on-s...](https://www.pbgc.gov/news/press/releases/pbgc-statement-on-sears-
bankruptcy-filing)

~~~
charlesism
Cheers. Wish I could reply with some interesting insights. My main take away
is that the state of the world leaves a lot to be desired :(

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justjonathan
So this seems terrible and unfair. The argument in favor of this sort of thing
(not made specifically here, but one that I have heard made in the past) is
that this kind of compensation for executives as necessary to prevent them
from abandoning a sinking ship and leading to an orderly shut down.

Perhaps somebody, more knowledgeable than myself, can weigh in on how we can
compensate executives not to run away, but prevent this kind of abuse?

~~~
howard941
One change would be to remove or at least extend to 8 years the fraudulent
conveyance lookback as it relates to insiders. Another change would demand
aggressive Chapter 11 Plan policing by United States Trustees or Bankruptcy
Administrators so we see more matters resolved in the manner of Enron and
fewer like Toys 'R Us and where this one is heading.

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purplezooey
Well, how about getting off the couch and voting next time if you don't like
this stuff.

