Sears Bankruptcy Yet Another Reminder Mitt Romney Should Go To Hell
The kids came from a catalog, too.

Sears filed for Chapter 11 bankruptcy Monday, and you're going to hear a lot of fond memories about kids looking through the annual Wish Book for Christmas gifts (Yr Dok Zoom helpfully included item numbers in at least one letter to Santa), and much wise commentary about how the old catalog and brick-n-mortar retailer just couldn't keep up in the age of Walmart and Amazon. And to a degree, those analyses have a point, but if they don't also attribute the death of Sears to the tender mercies of a venture capitalist dismantling a troubled but not doomed enterprise and making assloads of money off it, then they're not very honest autopsies. Sears may have had an outmoded business model, but surgeons seldom revive a patient by selling all the poor bastard's internal organs to the highest bidder.

Now, before Accuracy In Dumb 'Media Bias' Charts start complaining our hed is misleading propaganda, let's make clear that Mitt Romney had nothing to do with the demise of Sears. But the model of legalized piracy he embodied while running Bain Capital certainly does: Buy a big company with borrowed money, sell off every last profitable part of it, squeeze interest payments and dividends out (leaving it cash-poor), then put the empty husk into bankruptcy and screw the employees for being foolish enough to think they had "jobs." It's what Bain did to Toys R Us (and KB Toys before that) with the help of two other venture capital partners (including Jared Kushner's business partners at Vornado, natch). They bought the huge toy retailer with a vast amount of leveraged debt that no amount of Barbies or Hot Wheel sales could ever pay off, made off with all the profits, and shitcanned 30,000 workers without a cent of severance pay -- although management magnanimously announced, "in lieu of [severance] payment we were able to provide a minimum of 60 days notice to help employees begin their transitions." As they were required to, at a minimum, by law.

In the case of Sears, the pirate who took over the helm was hedge fund manager Edward Lampert, who owned the most shares of Sears and, until the bankruptcy filing yesterday, was also the company CEO. Here's Barron's, no home for "Internationale"-singing socialists, on the wise business practices Lampert brought to Sears, which he acquired it in 2005, merging it with Kmart:

A disciple of free-market theory and Ayn Rand, Lampert divided its business units to fiefs to war against each other and, as losses mounted, closed stores instead of reinvesting in them.

A stint in risk arbitrage at Goldman Sachs lead Lampert to found the hedge fund ESL Investments in his 20s. There, he bet on undervalued stocks, which made him a billionaire by his 40s and made him think he had better ideas for Kmart and Sears than retail experts.

Guess Retail Will Eat Itself isn't a good name for a band, then. And while ESL lost money on Sears, it's also possible Lampert managed to get a profit out of his tenure -- and even if the company is headed down the tubes, he still stands to make money.

The next chapter is already in focus, since he began laying the groundwork three years ago: the sale of 235 Sears- and Kmart-branded stores served as the foundation for real estate investment trust Seritage Growth Properties (SRG). Lampert is Seritage's biggest shareholder and board chairman. The sale gave Sears $2.7 billion in proceeds, which helped it stay afloat. Which was brilliant, because then Lampert could pay himself and Seritage millions of dollars a year in rent, while he parceled off Sears assets and brands.

Oh, sure, a bunch of employees and suppliers that relied on doing business with Sears may be shit out of luck, but there's still money for Lampert to wring out of the dying brand. He offloaded Craftsman Tools earlier this year, and if he can find an equity partner to finance the deal, Lampert would very much like to purchase the Kenmore appliance brand for $400 million so he can sack it -- assuming the bankruptcy judge approves the sale and no higher bidders turn up.

And just like Toys R Us vainly hoped last year, Lampert announced Sears Holdings looks to the holiday retail season to turn things around, but 142 Kmart and Sears locations will go out of business after January 1. Maybe the remaining 300 locations will be able to survive reorganization, but it seems unlikely given the Toys R Us model:

Jeffrey Pierce of Snow Park Capital drew the contrast with Toys "R" Us: That company was solvent and had good sales, but it "needed a financial restructuring," he says, but Sears "has a operational problem, and bankruptcy doesn't solve operational problems, it makes them worse."

"When it was a financial problem, you could have fixed it; as it became a both operational problem and a financial problem, the prospects to fix it out of court became increasingly dim."

Remember how Mitt Romney wanted to put his business savvy to work as president? We managed to dodge that bullet, but there was a black man in the White House, so now we have a different debt expert there, and Romney hopes to replace Orrin Hatch in the Senate. Then he can help write the financial rules for this fine land, and won't we all be happy then? Fuck him and his creepy voracious job-destroying buddies: Support Jenny Wilson and send Romney the hell back to his car elevator.

[Barron's (if it's pissy about the paywall, try an "incognito" tab) / The Nation / NBC News / NYPost / Activist Post]

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Doktor Zoom

Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.


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