[Congressional Record Volume 167, Number 184 (Wednesday, October 20, 2021)]
[Senate]
[Pages S7127-S7128]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. WARREN (for herself, Ms. Baldwin, Mr Brown, Mr. Sanders, 
        and Mr. Merkley):
  S. 3022. A bill to subject certain private funds to joint and several 
liability with respect to the liabilities of firms acquired and 
controlled by those funds, and for other purposes; to the Committee on 
Finance.
  Ms. BALDWIN. Mr. President, I rise to speak in support of legislation 
that I have recently joined Senator Warren in introducing. It is called 
the Stop Wall Street Looting Act, and it concerns some of the practices 
and the business model of what I would describe as predatory private 
equity firms.
  Now, before I dive into the details, I want to say that there are 
very good private equity companies that invest in the businesses they 
have purchased and the communities and the workers.
  But, unfortunately, this is something that I have firsthand knowledge 
of, the impact of predatory private equity businesses on workers and 
communities in my home State of Wisconsin. Several historic Wisconsin 
companies have been driven into bankruptcy or had their facilities 
moved overseas by the private equity funds and companies that acquired 
them.
  The first company that I want to talk about is ShopKo. For those who 
weren't in the ShopKo footprint in the United States, ShopKo is a 
retailer that was founded in 1961 in Ashwaubenon, WI. ShopKo was bought 
by a private equity firm, after many profitable years of existence, 
back in 2005. The firm was Sun Capital Partners.
  Sun Capital immediately executed what is known as a sale-leaseback. A 
sale-leaseback is a textbook private equity maneuver in which the fund 
sells the company's real estate right out from under it. Real estate 
and the facilities were the most major asset that ShopKo had.
  Certainly, they also had inventory and workers, but they owned the 
real estate, and this private equity firm basically sold ShopKo's 351 
locations with hundreds of millions of dollars, and they were sold to a 
company that would lease the land and buildings back to ShopKo.
  Sun Capital promised to reinvest the proceeds of the sale back into 
the company, but instead it paid out cash to itself in the form of 
dividends and management fees. Not only was ShopKo prevented from using 
its cash to reinvest, it was also loaded up with $200 million more in 
additional debt to fund even more payouts to Sun Capital executives.
  After years of being starved of investment, ShopKo was forced into 
bankruptcy and liquidation in 2019. The 3,000 Wisconsin workers were 
promised severance pay in exchange for working through the company's 
final days.
  I mean, if you think about that, you have a retail store. You don't 
want everybody to--the day they find out that store is ultimately going 
to close--to go out and find other jobs or you don't have the way to 
wind down your business. So they were promised severance pay in 
exchange for working through the company's final days. But when the 
time came to pay the workers, Sun Capital said it didn't have any 
money.
  When I met with these ShopKo workers, I remember meeting Kristi Van 
Beckum. She said to me:

       I always felt proud to work at ShopKo because it was a 
     Wisconsin-based company and it invested a lot in the 
     community. But I saw how Sun Capital sold out ShopKo's 
     properties and [literally] destroyed the company, all for 
     their own benefit. They made millions while I didn't even get 
     the severance I was promised. Sun Capital ran a company we 
     loved into the ground.

  More recently, I visited with workers at Hufcor, a company that has 
operated in Janesville, WI, for over 120 years. In 2017, the 
manufacturer was acquired by a private equity firm called OpenGate 
Capital.
  Wisconsinites are sadly already familiar with OpenGate. This is an 
L.A.-based private equity fund that bankrupted another Wisconsin firm, 
Golden Guernsey Dairy, back in 2013, only 2 years after acquiring it, 
laying off hundreds of workers in Waukesha, WI.
  Dairy workers showed up one day to find the doors locked. They were 
given no notice of their layoff, and they had to fight OpenGate for 8 
years just to get their back pay.
  This past summer, OpenGate notified the 166 workers at Hufcor that 
their jobs would be terminated, and the workers soon learned that the 
manufacturing operations would be moved to Monterrey, Mexico.
  When I visited with the workers this summer, I learned this from 
Michelle, who had worked for Hufcor for 23 years. She told me she is 
anxious about what training she might need to get another job that will 
pay what she earned at Hufcor.
  Then I also heard from Jesse. He was diagnosed with cancer 2 years 
ago, and he depends upon the health benefit provided by Hufcor for his 
treatment.
  These workers had great benefits because of their representation by 
the Communications Workers of America union and because of their 
employment at Hufcor, but they were left with an uncertain future 
because OpenGate has decided to move their jobs to Mexico.
  These stories illustrate the devastation that the predatory private 
equity business model has wrought on my State. These workers deserve 
better. We need to rip up private equity's predatory playbook that 
enriches looters, but leaves workers with nothing but pink slips.
  I was proud to work with Senator Warren to introduce the aptly named 
Stop Wall Street Looting Act. This legislation will prevent private 
equity firms from enriching themselves by starving businesses of 
investment and running them into bankruptcy or shipping their jobs 
overseas. This bold reform will help rewrite the rules of our economy 
and protect workers from the predatory practices so that we can start 
to reward hard work, not just wealth.
  Thank you for the opportunity to share the stories from my State, and 
I look forward to working to pass this important legislation.

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