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.
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.
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).
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?
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.
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.