AOC, Elizabeth Warren question Shopko's owner on severance pay
Massachusetts Sen. Elizabeth Warren and New York Rep. Alexandria Ocasio-Cortez pressed executives at Sun Capital, the private equity firm that owned retail store Shopko until its liquidation earlier this year, about their reported plan to pull severance payments from thousands of laid-off employees.
In a letter addressed to co-CEOs Rodger Krouse and Marc Leder on Friday, the two Democratic lawmakers criticized the executives for reneging on their promise of severance for Shopko employees.
"Your company reaped millions of dollars in profits from your Shopko acquisition, but the decisions you made ultimately led to the company's liquidation," they said. “This model of financial engineering is all too common in the private equity industry, and marks an especially shameful end to your disastrous management of the company."
The Wisconsin-based retailer -- which was purchased by Sun Capital Partners in 2005 for $1.1 billion -- filed for Chapter 11 bankruptcy at the beginning of January and in March, after failing to find a buyer, closed the remainder of its stores.
In the letter, the congresswomen requested the executives turn over packets of information given to employees regarding retention or severance payment, while questioning whether the company had any plans to pay promised severance or provide financial relief to the “14,000 Shopko employees who lost their jobs.”
The letter comes one day after Warren released a proposal to rein in the private equity industry, calling for a reinstatement of modern-day Glass-Steagall Act, a law passed in the wake of the Great Depression that separated commercial and investment banking.
"To raise wages, help small businesses, and spur economic growth, we need to shut down the Wall Street giveaways and rein in the financial industry so it stops sucking money out of the rest of the economy," she wrote in a Medium post.
It's also not the first time that Warren, a fierce consumer advocate who’s also seeking the Democratic presidential nomination, and Ocasio-Cortez have teamed up to address issues involving bankruptcy and the treatment of workers by large corporations.
In May, Warren and Ocasio-Cortez slammed Treasury Secretary Steven Mnuchin for his role in the bankruptcy of chain store Sears, questioning his long-standing ties to Sears former chair and new owner Eddie Lampert.
"We are deeply concerned by the financial engineering and potentially illegal activity that took place at Sears Holding Corporation while you served on the company's board,” they wrote in the letter. “In addition, we are concerned that, as Treasury Secretary, you are in a position to take actions that benefit Sears' shareholders and owners at the expense of workers and taxpayers.”