Business

Shopko ex-employees seek severance pay from private equity owners

Workers hope to emulate Toys 'R' Us agreement

Former Dubuque Shopko employees Trina McInerney (clockwise from back left), Rhonda Sheffert, Deanna Green, Makayla Mihalakis, Kim Even and Chalet Long hold up homemade signs critical of Sun Capital Partners, the retailer’s private equity owner, on the store’s last day June 23. (Courtesy Trina McInerney)
Former Dubuque Shopko employees Trina McInerney (clockwise from back left), Rhonda Sheffert, Deanna Green, Makayla Mihalakis, Kim Even and Chalet Long hold up homemade signs critical of Sun Capital Partners, the retailer’s private equity owner, on the store’s last day June 23. (Courtesy Trina McInerney)
/

The closures of big-box retailers have lasting consequences, even after their automatic doors slide shut for the last time.

Some former employees of one such store, Wisconsin-based general-merchandise chain Shopko, now are seeking severance pay from its parent private equity firm, arguing that its acquisition started them on the path to unemployment.

Sun Capital Partners of Boca Raton, Fla., acquired Shopko in a 2005 leveraged buyout for around $1.1 billion, and the next year sold 178 company stores in a $815 million sale-leaseback agreement.

Shopko filed for Chapter 11 bankruptcy in January, citing “excess debt” and a “challenging retail environment,” and in March announced it would liquidate its remaining stores after executives were unsuccessful in finding a buyer.

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

One of the last to close was the Dubuque Shopko, where Trina McInerney, 54, worked for the past 11 and a half years, holding cash office, price accuracy and receiving specialist positions.

The closure on June 23 left McInerney, who lives in the city with her boyfriend, and her “work family” without medical, dental or optical insurance, and in search of new employment.

ARTICLE CONTINUES BELOW ADVERTISEMENT

“The biggest part was the devastation of losing your job, not having any control,” she said. “They took everything away from us with their greed.”

McInerney said her store had 34 employees at the time the closure was announced, a number that dwindled to 12 by its last day open.

“I liked working there and the people I worked with. ... I wasn’t ready to leave, so I just stayed until the end and I’m glad I did,” she said.

McInerney is one of several Shopko employees from 120 stores in 10 states who have banded together under the national United for Respect retail campaign.

The movement last month mailed Sun Capital executives an open letter asking the firm to create a fund for issuing severance pay to the approximately 14,000 employees who lost their jobs.

“Many of these stores are the only place for smaller communities to shop for miles and miles and many of those employees are faced with unemployment in areas where jobs are hard to come by,” said Lily Wang, deputy campaigns director with United for Respect.

“I think the fact so many people from across the region are coming together to take action together shows how dire the situation is.”

Wang pointed to her movement’s work with former employees of Toys “R” Us, who won a $2 million severance settlement in late June and a $20 million hardship fund in November from two private equity owners, and said she was “hopeful” the former Shopko employees could achieve similar results.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Bain Capital and KKR acquired Toys “R” Us in a 2005 leveraged buyout and the company filed for bankruptcy in September 2017.

Attorney Jack Raisner, of New York-based Outten and Golden, who represented Toys “R” Us employees in the class-action case, said at least 30 Shopko employees recently have retained his firm in connection with unpaid severance claims.

Still to be determined, Raisner said, are how many former employees ultimately could benefit, what settlement amount they could receive and when.

In an emailed statement to The Gazette, a Sun Capital spokesman said the firm agreed to pay Shopko $15.5 million to cover administrative and priority claims, including “more than enough” to cover severance claims.

McInerney, who created homemade signs critical of Sun Capital to circulate on her last day at Shopko, said she is optimistic that she and her co-workers will receive severance pay.

“I hope Sun Capital is prepared because I’m not going to let them take this from me and not get anything out of it,” she said. “I will fight until there’s no more fight in me.”

• Comments: (319) 398-8366; thomas.friestad@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.