Sen. Warren, Rep. Ocasio-Cortez demand Shopko owner pay severance to ex-employees

A shopper walks out of a Shopko in Cedar Rapids. The store closed in 2001. (The Gazette)
A shopper walks out of a Shopko in Cedar Rapids. The store closed in 2001. (The Gazette)

Two more U.S. lawmakers have urged Shopko’s private equity owner set up a severance fund for ex-employees of the now-shuttered retailer.

U.S. Sen. Elizabeth Warren, who is running for president, and U.S. Rep. Alexandria Ocasio-Cortez sent a letter dated July 17 to Sun Capital Partners CEOs Rodger Krouse and Marc Leder.

The elected officials tied Shopko’s liquidation earlier this year — and the resulting loss of approximately 14,000 jobs — to the firm’s “disastrous management,” dating back to its $1.1 billion leveraged buyout of the discount retailer in 2005.

The next year, Sun Capital sold 178 company stores in a $815 million sale-leaseback agreement, and in January filed for Chapter 11 bankruptcy, pointing to “excess debt” and a “challenging retail environment.”

In the letter, Warren and Ocasio-Cortez asked Sun Capital executives to reply by July 30 with copies of information packets reportedly given to employees “offering retention or severance payment in order to keep them working until the store closed” and answers as to whether the firm has plans to pay severance or provide financial relief.

That former Shopko workers have not yet received severance pay is an “egregious betrayal,” Warren and Ocasio-Cortez’s letter read.

“While you will walk away with a healthy return, the workers who kept the stores running despite every obstacle you threw in their path will come away with nothing,” the elected officials wrote.


The letter coincides with Warren’s introduction of new legislation, the Stop Wall Street Looting Act of 2019, which among its provisions would require private equity funds to be jointly liable for their target companies’ debt, ban dividends for two years after an acquisition and prioritize worker pay in bankruptcy proceedings.

Other parties have sent Sun Capital similar letters earlier this year. In June, U.S. Sen. Tammy Baldwin wrote to Sun Capital requesting it set up a severance fund, as did members of the national United for Respect retail campaign.

Sun Capital previously has said the firm agreed to pay Shopko $15.5 million to cover administrative and priority claims, including “more than enough” to cover severance claims.

The retailer had 363 stores throughout the central, west and Pacific northwest U.S. regions, including 36 across Iowa.

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