MADISON, Wis. (WFRV) — Senator Tammy Baldwin has released a letter rebuking Sun Capital Partners Inc. for its management of Shopko Stores and its bankruptcy. She also says she’s working to do something in response.
“I am writing on behalf of the nearly 3,000 Wisconsin workers who will or have lost their jobs as a result of the ShopKo liquidation,” Sen. Baldwin said in her letter.
She went on to ask Sun Capital to “keep its promise and establish a fund to pay the severance of ShopKo employees harmed by the liquidation.” News surfaced employees may not receive severance earlier this month.
Sen. Baldwin also asked the company to “pay the $13.5 million in taxes and penalties that ShopKo currently owes” Wisconsin.
Shopko was bought by Sun Capital, based in Boca Raton, Flor., in 2005.
Throughout the letter, Sen. Baldwin highlighted how Sun Capital “extracted value” out of Shopko at the expensive of the employees and, ultimately, Shopko as a whole.
The Democratic senator called Sun Capital’s sale leaseback “a textbook private equity maneuver.”
Sun Capital sold the real estate out from under ShopKo’s 351 locations to a company that would lease ShopKo’s buildings and land back to ShopKo in one of the largest sale leasebacks in history.
SunCapital said at the time that ShopKo would use the proceeds from the sale to open new locations.
But that didn’t happen.
Instead of investigating in the company, you paid yourselves over $170 million in dividends and management fees, starving ShopKo of the investment it needed to stay competitive.Senator Tammy Baldwin
Sen. Baldwin went on to explain ShopKo borrowed millions from lenders “to pay dividends to Sun Capital and other investors between 2007 and 2015.”
According to the letter, “ShopKo promised – in written communication – severance pay to its employees in exchange for working to close down their hundreds of stores.”
In closing, Sen. Baldwin again called Sun Capital’s actions unsurprising to “anyone familiar with the abuses of the private equity playbook.”
Sen. Baldwin says she and her colleagues “will continue to work…to address the forces in our economy that hollow out Wisconsin companies and communities by putting profits for executives over investment in workers.”
The remaining Shopko stores were scheduled to close Sunday, June 23.