How Romney and Bain Capital Bankrupted One Firm, Fired All its Workers, and Pocketed $100 Million
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Mitt Romney made a boatload of money for himself and his fellow fat cats. No doubt about it. Billions. But he made it the way Americans hate most – Wall Street style wheeling and dealing.
Americans hate it because when all that scheming went bad, when the market collapsed, it was the 99 percent who footed the bill to bailout Wall Street. The same is true of Romney and Bain. When Bain bankrupted the companies it bought – and Bain did that shockingly often – workers and Main Street businesses paid the price.
Romney contends his money making as CEO of Bain qualifies him to be President of the United States. That’s true if Americans believe money should flow out of their pockets, out of the cash registers of Main Street shops and into the Swiss bank accounts of Romney and his 1 percenter cronies.
Here are some of Romney’s victims, Main Street businesses owed money by just one bankrupted Bain company, American Pad and Paper Co. (Ampad): Technical Coatings Laboratory, owed $125,191.20 and paid in bankruptcy $237.03; Services Plus Inc., owed $12,064.71, paid $22.84; Crown Vantage, owed $32,155.26, paid $60.89.
In the 15 years Romney ran Bain from 1984 to 1999, 22 percent of the companies it invested in went bankrupt or closed within eight years , according to a study by the Wall Street Journal.
In fact, according to the Wall Street Journal, the bulk – 70 percent – of the $2.5 billion Bain made for investors during that time came from just 10 deals. Four of those ended up in bankruptcy as well – killing jobs and jilting Main Street businesses. Despite that, Romney and the Bain investors fattened their Swiss bank accounts.
More Main Street victims : Lakeway Container Inc., owed $47,143.56 by Ampad, paid $89.26 in bankruptcy; Olympic Adhesives, owed $6,566, paid $12.43; American Chain and Gear, owed $505.54, paid 96 cents.
Bain’s handling of Ampad illustrates how the rich extract money from these deals and leave behind wounded workers and Main Street shops. Bain bought Ampad from Mead Corp. in 1992 and added SCM Office Supplies to the holdings two years later. Like many leveraged buyout deals, these were financed with loans secured by the purchased companies’ assets.
Within hours after buying SCM, Bain fired every one of its 350 workers in Marion, Ind. Bain, through Ampad, told the shocked and terrified workers they could apply for their former positions if they wanted them back – at less pay, fewer benefits and worse working conditions.
One way leveraged buyout firms like Bain make money is by taking it from workers – slashing their pay, benefits and pensions. This also makes companies look more productive, enabling buyout firms like Bain to make money on taking them public.
Bain bought SCM early in July, 1994. Within two months, the workers went out on strike, seeking restoration of some of their pay and benefits. Workers sought help from Romney, who rebuffed them as he was running for Ted Kennedy’s U.S. Senate seat. After losing that race, Romney returned to Bain, permanently closed the Marion plant and moved its equipment to other Ampad facilities.
More Main Street victims of Ampad bankruptcy: Green Bay Packaging Inc., owed $75,551.92, paid $137.37; Springfield Electric, owed $3,919.88, paid $7.23; American Coffee Break Service, owed $1,349.73, paid $2.56.
Through 1999, Bain continued to be the single largest shareholder in Ampad, and three Bain executives sat on its board of directors. Ampad struggled to meet the low price demands of big box retailers – like Staples, in which Bain had also invested and where Romney sat on the board of directors.