Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Companies controlled by PE firms use bankruptcy to shed pension obligations

washingtonpost.com

Post reply on HN
Print view View original

11–20 of 155 posts

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#11

Post by sct202 »

thinkr42 wrote: post #3

I worked at Marsh from 2005-2015 in both corporate and the store. We were always skeptical of Sun, the CEOs that would cycle through didn't grasp the basics of grocery, and as an organization we failed to invest in basic infrastructure that would reduce our overall costs which are huge in the 2% margin grocery business. At the store we had registers with an OS from the 80's, a common thing if you look around, but we…

I wonder how much of that was politicking, where someone was keeping something purposefully bad so that they could sell a solution that "saves so much money" when a far cheaper solution would save as much money and cost way less.

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#12

Post by late2part »

prklmn wrote: post #7
olliej wrote: post #4

Still amazing to me that owners and equity firms get money before pension funds. The literal theft - a pension is part of your income, and being able to sell off a company without paying off pension debts literally means retroactively stealing wages from workers. Remember that banks, etc all have insurance on their debt, apparently that doesn’t matter - companies are simply stealing from money that is not theirs, and…

It’s only ok because they’ve written all the laws for themselves. Of course the common person would not deem this to be ok.

We the people of the United States of America elect the people that write the laws. If we don't like what they're doing, vote them out and vote in people that will write the laws we want.

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#13

Post by sct202 »

AdamM12 wrote: post #8

On some levels the government insuring pensions like this creates an economic incentive to do exactly what these guys are doing.

Government pensions aren't insured like this and also have widespread issues with leaders coming in an slashing contributions so that they can spend the money elsewhere; eg, Illinois on every level of government. The insurance at least protects the pensioners to some degree.

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#14

Post by Spooky23 »

sct202 wrote: post #11
thinkr42 wrote: post #3

I worked at Marsh from 2005-2015 in both corporate and the store. We were always skeptical of Sun, the CEOs that would cycle through didn't grasp the basics of grocery, and as an organization we failed to invest in basic infrastructure that would reduce our overall costs which are huge in the 2% margin grocery business. At the store we had registers with an OS from the 80's, a common thing if you look around, but we…

I wonder how much of that was politicking, where someone was keeping something purposefully bad so that they could sell a solution that "saves so much money" when a far cheaper solution would save as much money and cost way less.

Sometimes companies maintain high friction/high cost crap like that to scare off acquisition.

A friend worked for a regional bank that had a strategy of purposeful obsolescence to maintain control with the core shareholders, who were mostly from one family. They were using 1980s era AS/400 systems with terminals as late as 2008, and had only 1 PC assigned to a manager in the branches, with connectivity via ISDN.

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#15

Post by lightedman »

late2part wrote: post #12
prklmn wrote: post #7

Earlier quoted context omitted.

It’s only ok because they’ve written all the laws for themselves. Of course the common person would not deem this to be ok.

We the people of the United States of America elect the people that write the laws. If we don't like what they're doing, vote them out and vote in people that will write the laws we want.

Wrong, any person can write a law (and has been done multiple times in the past.) We elect the people that AMEND and PASS the laws.

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#16

Post by michaelt »

late2part wrote: post #12
prklmn wrote: post #7

Earlier quoted context omitted.

It’s only ok because they’ve written all the laws for themselves. Of course the common person would not deem this to be ok.

We the people of the United States of America elect the people that write the laws. If we don't like what they're doing, vote them out and vote in people that will write the laws we want.

To do that should I vote Democrat, Republican or Independent?

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#17

Post by pjc50 »

This kind of thing is horribly common in declining firms - a last minute attempt to asset-strip everything of value and transfer it out of the corporate entity, which can then go bankrupt, stiffing creditors and employees.

See also Radio Shack, Toys R Us, Maplin, and British Home Stores: https://www.theguardian.com/business/2017/feb/28/philip-gree...

(The astonishing thing there is that somehow the thief was shamed into returning the money.)

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#19

Post by bsbechtel »

olliej wrote: post #4

Still amazing to me that owners and equity firms get money before pension funds. The literal theft - a pension is part of your income, and being able to sell off a company without paying off pension debts literally means retroactively stealing wages from workers. Remember that banks, etc all have insurance on their debt, apparently that doesn’t matter - companies are simply stealing from money that is not theirs, and…

The government does the same thing with SS. If you pass away before collecting benefits, those benefits aren't passed on to those who inherit your estate.

Re: Companies controlled by PE firms use bankruptcy to shed pension obligations

#20

Post by nradov »

Defined benefit pension plans create a huge moral hazard and are just too risky for employees, employers, and taxpayers alike. As a society we should be aggressively phasing out pensions and replacing them with defined contribution plans like 401(k) and 403(b). That way each employee's retirement funds are in an individual named account held by a brokerage and can't be taken away. Even if your employer goes bankrupt, everything already deposited in your account is still yours.
Post reply on HN