Showing posts with label bankruptcy. Show all posts
Showing posts with label bankruptcy. Show all posts

Wednesday, October 2, 2019

Which Retailer Will Bite the Dust Next?


Another retailer bit the dust and filed for bankruptcy, Forever21. It’s not that people don’t have the money for cheap and disposable clothes with each season and don’t spend, we are a consumerist society and the economy is booming, with the lowest unemployment rate possible, 3.7 percent in August 2019.

But people are spending money more wisely and often from their computer keyboards and the comfort of their own homes, not having to spend precious time, wear and tear on cars, gasoline, or braving public transportation to shop.

Some even find great bargains in thrift stores, estate sales, and garage sales. Amazon is thriving thanks to low delivery costs provided among others, by the USPS. If such delivery costs should increase, then the online shopping habits of U.S. consumers may change away from Amazon.

People don’t want to take the time to go shopping in a mall anymore, or in grocery stores, as home deliveries for food are relatively cheap. Time can be spent on other activities because Americans are well off compared to most other nations and can afford to pay someone else to shop for their food. Few others in the world have that luxury; they also spend much more of their disposable incomes for food. Americans spend less than 15 percent of their after-tax earnings for groceries.

Fighting crowds and long lines for the cashier at the mall is a dauting proposition that most Americans have learned to dread and avoid. In large urban areas the malls have become the hang out place for foreign youth and sometimes their parents who congregate for their communities’ latest news and gossip as they did in the places they came from.

Americans have so many options that they have no idea how other people in the world live or shop. They don’t understand lines unless it’s lines to buy a concert ticket, a football ticket, Black Friday sales, or to get into a much-desired venue. Lining up for food or necessities is an alien concept to most Americans unless they are naturalized Americans like me who grew up under the communist boot and stood in lines every day in order to find food and other necessities to survive.

Who will be the last retailer standing when the war for the American pocketbook between them and online giants like Amazon intensifies?

Amazon will be one major winner, as it has already put out of business many small and large retailers which have not adapted well or fast enough to the Internet age.

Large retailers like Walmart are trying to keep up with Amazon but many of its customers are left out of online commerce as they do not have Internet access.

Costco’s e-commerce is thriving, having experienced “an increase of 20 percent year-over-year during the company’s second quarter 2019. Growth was seen in orders, profits and other metrics, in addition to digital sales.” People bought more “groceries, consumer electronics, hardware, health and beauty aids, tire and automotive, toys, and seasonal apparel.”

Many customers boycotted retailers like Target who made it their mission to force female customers and their children to use the same bathrooms with perverts of the opposite sex. That drove away many customers who did not feel safe in their stores. Some have not returned.

Boycotts of the Christian fast food chain, Chick-fil-a, have backfired, patronage of its restaurants has increased, and the fast food chain is expanding nationally and internationally.

There will be older Americans who would still want to try on clothing and feel the fabric before they buy. For them, ordering online is a technological inconvenience. They prefer to deal with a human being, but those human beings are scarcer in large department stores as they have cut back staff to the bare minimum.

Inventories and choice are down in all department stores. The associates who are available, hail from a foreign country where the concept of customer service does not exist, so customers leave the department store disgusted and disappointed with service. Even Nordstrom, long renowned for its customer service, has come down a few notches.

Higher end clothing and luxury items will always be available but most stores that will be in competition with Amazon will stock up essentials. Everybody needs household items, cleaning supplies, sheets, towels, and basics. In the makeup department, women will still prefer to try on things before they buy the right colors.

Many think that Walmart will probably survive because one cannot yet buy enough good groceries on Amazon. Perhaps if they refine their choices. But Walmart and Target are still cheaper for most consumers.

Eileen Johnson, who worked in the beauty industry, strongly believes that “cosmetics is succeeding online. The department stores now poach their in-store business by offering better cosmetics deals and gifts online. People come to the counter, try items, take pictures of what they want, and then order online. What is currently thriving and what will be the future are Sephora and Ulta. These are unique experiences that don’t require employee intervention. The downside is that no one is knowledgeable anymore on products, but the millennials and younger generations use YouTube and cosmetic blogs to get their info anyway.”

The old boutiques and seamstress style shops might make a comeback for the very affluent. Perhaps the more enterprising and talented among us will dust off their sewing machines and start making their own clothes again. With such a possibility, fabrics, sewing patterns and essentials would make a comeback as they were quite common in the 1980s America. Some small online retailers are already offering services where they can measure their customers for the proper-fitting shirts and blue jeans.

On the other hand, if we develop into the one-party state that we are slated to become, when equal pay will kick in, only the approved attire with limited choices and colors will be sold. With equal wages, few will afford nice things, just the elites in power. The rest will only need one dress, trousers, a few shirts, a couple of uniforms, one pair of shoes or sandals, and one pair of boots, no purse or makeup and other frillies.

In communist regimes like China, people who ran afoul of the “behavioral modification” program called social scoring of the Communist Party, have already been prevented from flying. An embarrassing ring tone warns others of the presence among them of blacklisted Chinese consumers who are “bad” and “untrustworthy” as defined by the chairman of the Communist Party. They are on an undesirables list of 13 million Chinese consumers so far. https://tinyurl.com/y26g6g5m)

In a totalitarian, central government-run economy, most income will be spent for taxes, survival basics such as rent, utilities, food, bikes, and monthly fares for bus/train. There will be no disposable income for extras like entertainment, vacations, and luxury goods as the economic police would not encourage such bourgeois accumulation of goods.





Friday, March 9, 2018

HCR ManorCare Bankruptcy and Patients

One of the largest nursing home chains in the U.S., HCR ManorCare Inc. has filed for bankruptcy protection on March 4, 2018 in the Bankruptcy Court in Wilmington, Delaware.  Quality Care Properties Inc., HCR’s landlord, will take control of the company.

The private-equity firm Carlyle Group owns HCR ManorCare Inc. The departing CEO, Paul Ormond received $115 million in deferred compensation and severance even though HCR is approximately $230 million in debt.

HCR missed numerous rent payments even though Quality Care Properties Inc. agreed to multiple temporary reductions in such payments. Last August QCP took legal action and sued “to replace the company’s management and to appoint a receiver with the power to collect rent.”

The plan of reorganization filed with the bankruptcy court stipulates that the operating business will stay out of bankruptcy and Carlyle’s equity stake will be wiped out.

As per chapter 11 bankruptcy rules, HCR ManorCare will pay all creditors, vendors, and suppliers in full and on time with the exception of QCP. HCR blamed its problems on low reimbursement rates from government health programs.

According to the Wall Street Journal, “The Company, which employs 50,000 people, last year posted a pretax loss of $267.9 million on revenue of $3.7 billion, 82% of which derived from the long-term care business. HCR ManorCare listed $4.3 billion in total assets and $7.1 billion in total liabilities, debt and financing obligations, in court filings.” https://www.wsj.com/articles/hcr-manorcare-files-for-bankruptcy-1520261353?emailToken=3e08c926ad937feb42c06a6e927e293e9epWtsVf4xiOTCAmih%2FzF90OQmpFg%2FwrZe27eRUH2LN9hFhst1liU6fj2rUQEqSWwLOngxtntQr57quk37ilag%3D%3D

When the ownership transfer will be completed, the current Chief Executive Steven Cavanaugh will be replaced by Guy Sansone and Laura Linynsky, the senior vice president at QCP will become interim CFO at HCR ManorCare.

The Toledo-based HCR ManorCare will need approval of the chapter 11 bankruptcy plan within 40 days while QCP will seek government regulatory approval, which may take three to six months, in order to operate a health care business.

HCR ManorCare runs 500 skilled-nursing and rehabilitation centers, assisted living facilities, hospice, and home health agencies. The skilled-nursing industry blames its many problems on low government reimbursement, declining occupancy, and high labor expense.

 “As part of the agreement, HCR ManorCare paid QCP $23.5 million in past-due rent. The companies' plan sponsor agreement stipulates that HCR ManorCare will continue to pay rent during the Chapter 11 period.” http://www.modernhealthcare.com/article/20180305/NEWS/180309949

According to health experts, HCR ManorCare treated 143,000 patients in 2017 and has experienced declining Medicare reimbursements due to the growing Medicare Advantage plans offered through private insurers.

The bankruptcy agreement promises to provide stability for employees, residents, and patients. However, the turnover of employees at one such HCR ManorCare facility in northern Virginia is constant as I have witnessed first-hand over the last four years.

Medicare has been stripped of more than $716 billion over a ten year period in order to fund Obamacare. This has affected seniors and their medical care, including their ability to keep their doctors or to find specialists. Some have decided to no longer accept new Medicare and Medicaid patients and keep only the well-established patients who were grandfathered into the private system they began to accept. https://www.forbes.com/sites/theapothecary/2012/08/16/fact-checking-the-obama-campaigns-defense-of-its-716-billion-cut-to-medicare/#326c1c37385f

Nursing homes are financially strapped due to continuing underfunding. Mark Parkinson, CEO of the American Health Care Association, wrote, "In many areas of the country, nursing homes are paid for only a fraction of the care they provide. Our nation is at turning point where we must decide if we are going to continue to take care of America's seniors and individuals with disabilities." http://www.modernhealthcare.com/article/20180305/NEWS/180309949

This statement hits home for me. HCR ManorCare patients are cared for in one facility in northern Virginia where the atmosphere is somewhat strained, the staff is always short-handed, residents are not always cared for well, medications are denied because they are too expensive, doctors, nurses, and CNAs come and go without as much as a call to the families, patients fall all the time and break bones and hips as was the case for my mom for the last four years and most recently, UTIs are commonplace due to many reasons, one being lack of proper sanitation and slow diapering, not changing gloves between patients, not changing soiled sheets due to low CNAs to patient ratios, and lackadaisical cleaning of rooms.

HCR ManorCare is not the worst facility in the industry and not the best. There is a constant turnover of aides from African countries and new students come to learn on the job; there are employees and CNAs who really care about their patients and go above and beyond the call of duty; they tend to remain on the job long-term; and there are others who do not care at all for their patients.

It is a difficult and demanding job to care for human beings who are so sick that they can no longer fend for themselves and some are even helpless to feed themselves. Care givers must detach themselves from the pain and suffering and meet their patients’ needs. To make matters worse, some patients have dementia and are not cooperative with their CNAs.

Bureaucrats look at the business side of the operation. Due to financial reasons, social workers are often struggling to find transport for their handicapped patients to doctors and hospitals when families are physically unable to do so.

Occasionally nursing homes replace lost or stolen items, yet there is no plan in place for employees to watch for the dentures of the patients they care for. Consequently, dentures are constantly thrown away with the meal tray even though the nursing home must spend money to replace them.

Patients who no longer have families to insist that lost dentures be replaced, are left toothless and meals are chopped up for them every day. Mom’s nursing home lost four of her dentures, sometimes uppers, sometimes lowers. And it’s not just dentures and glasses that are lost, personal belongings are stolen constantly, and even food brought from the outside disappears.

I have watched new recruits who do not understand well or don’t care how disease spreads and the importance of sanitary conditions and gloved, gowned, and masked precautions for themselves and their patients.

Whether they are good or bad, nursing homes and other rehab facilities are a necessary “evil” that our society does not really understand well until they bother to visit their loved ones more than once a year or wind up themselves in one. Not everybody can afford to buy full-coverage private nursing home insurance in order to spend the last years of their lives in the posh five star private facilities, with care and dignity. But then, who is to say that they will be treated better?

Thursday, August 1, 2013

Detroit's Failure, a Product of Liberalism and Greed

“The last thing Detroit needs is a bailout. What it needs is to sweep away a city charter that protects only bureaucrats, civil-service rules that straightjacket municipal departments, and obsolete union contracts. A bailout would just keep the dysfunction in place. Time to start over.”
- Bill Nojay, Former COO of Detroit’s Department of Transportation

Detroit, the former “Paris of the West” is now oozing blight, rust, decay, garbage, and union corruption. It is now a pathetic example of its former greatness, the city of the auto industry, envied around the world, the city of a thriving middle class.

At the height of its glory, Detroit was America’s fourth largest city with almost 2 million people. After decades of population flight, there are 700,000 people left. Police response to an emergency call is 58 minutes, street lights are cut in half, and the median home price is $9,000, with some homes worth as little as $500. It seems like a bargain if the city will ever be rebuilt. Its location is certainly strategic, with access to the Great Lakes. There are interests in the heavy rail industry and there are plans for a $25 million light rail.

The statistics are sad. Thirty percent of Detroit’s 140 square miles are vacant or deserted; 33,500 homes are unoccupied and 90,000 lots are vacant. Many homes have been bulldozed. If a lone home is occupied on an otherwise abandoned street, the residents are forced to move and the house is demolished. Sixty percent of children live in poverty. Homicide rose 79% in 2011. There is no chain supermarket left in the city.

Detroit is a classic example of failed obamunism and personal responsibility; it played out the union-controlled socialism to the bitter end and it lost the destructive game - eventually all socialists run out of other people’s money as Margaret Thatcher used to say. Detroit is now a picture of litter and filth with few suburbs left that take pride in their appearance. Pontiac and Flint are not far behind in their march towards insolvency.

There are 61 counties and municipalities currently in the U.S. who have filed for bankruptcy or will follow in the footsteps of Detroit, the largest municipality to fail in a string of more to come.

The administration’s Cap and Trade policies will de-industrialize our country, bankrupting so much of the coal industry that generates electricity, devastating businesses and individuals alike in the process, and causing more cities and counties to fail.

Many executive orders signed under every presidency since Bush Sr. (1992) implemented the United Nations Agenda 21. Through green zones, stacking people in high rise, mixed-use apartments in approved corridors, the Wildlands map, Smart Growth, Sustainability, environmentalism gone amuck which claims to save the planet from a manufactured global warming, will cause abject poverty in many other places.

There were many reasons why Detroit failed:

-          union control and collective bargaining

-          automatic union deductions funds; public unions block any meaningful reforms and help elect local officials who are sympathetic to unions and who in turn negotiate the union members’ salaries and benefits

-          public employee unions corruption (pension abuse such as “spiking” pensions with excess overtime during the last year of employment; claiming disability in the last year before retirement; contracts with much earlier retirements than the private sector)

-          nobody is terminated for incompetence if they belong to a union

-          use of union dues to support Democrat coffers with or without employee approval

-          non-stop Democrat control of the city since 1961

-          out of control corruption

-          citizens re-electing the same individuals who actually did jail time for their crimes

-          lack of personal responsibility and work ethic

-          job losses in the auto industry

-          decades of population flight

-          race riots in the late sixties and early seventies

-          environmental and health warfare

-          diminished tax base following the population exodus

-          the failure of the federal government to protect our manufacturers

-          the main stream media misinforming low information voters

-          bank deregulation and capital flight

-          closings of catholic schools in the 1970s

-          racial tensions exacerbated by Coleman Young

-          purposeful segregated areas in town by various black mayors

-          lack of collection of property taxes (50% collection rate) and enforcement of non-payers

-          distorted Christian values

-          burdensome additional utility, sales, and property taxes extracted from the poorest of the poor instituted by Mayor Cavanaugh (an additional 3 percent)

Detroit is the most race-conscious city in America. Blacks have been told for so many years that white men are the reason for their economic plight therefore they blame white people for their problems. The culture of drug dealing and drug use dominate the inner-city. Single parent households have replaced fathers with the nanny state. Government welfare enabled women to procreate and survive while making fathers obsolete.

Children are prescribed Ritalin when it is not really necessary, adults are over-prescribed anti-depressants, and their diets are poor. Is it any surprise that people are left confused and unable to make proper decisions, especially when they are lied to by the MSM?

The two-thirds majority in Congress carries the blame for voting for NAFTA, CAFTA, GATT, and bank deregulation, for enabling the manufacturing exodus to other countries in search for cheaper labor. Over-demanding union contracts shipped more jobs to right to work states, diluting the tax base even more.

NAFTA, the North American Free Trade Agreement between Canada, Mexico, and U.S., passed in January 1, 1994, and CAFTA, Central America Free Trade Agreement, an extension of NAFTA, passed through U.S. House of Representatives by one vote in the middle of the night and signed by Congress on July 27, 2005, “caused the race to the bottom in labor.”

In the Chapter 9 bankruptcy court documents, bankruptcy which was allowed to proceed, half of the city’s liabilities are in pension plans and retiree health care costs. These benefits were negotiated by unions on behalf of their constituents.

Steven Rattner of the New York Times argues that we have to bail out Detroit and tries to make the case that the “700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them. America is just as much about aiding those less fortunate as it is about personal responsibility.”

I happen to disagree because Hurricane Sandy was a sudden act of nature, totally out of anybody’s control, whereas Detroit’s problems were exclusively man-made over many decades of corrupt mismanagement. Many issues could have been addressed and avoided at the voting booth and through personal responsibility.

He further argues that the “shared sacrifice by creditors, workers, and other stakeholders” in the General Motor and Chrysler auto “rescue” should be maintained in rescuing Detroit. I would argue that he is comparing apples and oranges.

First, the auto rescue was not a “shared sacrifice,” it was a forced government reimbursement of stockholders of 29 cents on the dollar to the benefit of union interests, setting aside capitalist contract law and the prior claim of bondholders.

Second, the rest of the country should not have to “sacrifice” for the irresponsible behavior of Detroit unions, union members, politicians, mayors, and the lack of responsibility of Detroit citizens at the ballot box who thought that it was a good idea to keep in power the same corrupt Democrats since 1961.

Americans were not and are not in favor of bailing out General Motors, which is now investing more taxpayer dollars into job creation, factories, ventures, research, and dealerships in China rather than the U.S., and Chrysler, which is now an Italian-controlled corporation. Likewise, the majority of hard-working Americans are not in favor of bailing out Detroit nor California.  

Further reading: 

Who Killed Detroit City and Why? By Dave Hodges, Activist Post
We Have to Step In and Save Detroit, Steven Rattner, The New York Times
The Public Union vs. the Public (Philip Howard, founder of Common Good)
http://bit.ly/13Xllat