T.H. Lee $1 Million for Workers Called ‘Grossly Inadequate’
(Bloomberg) -- Workers laid off from Thomas H. Lee Partners LP’s Midwestern chain Art Van Furniture Inc. called a $1 million relief fund the firm is setting up for them “grossly inadequate,” in the latest example of protests against failed retailers owned by private equity investors.
Each of the 3,100 Art Van employees who lost their jobs and health benefits amid the economic turmoil of the pandemic lockdown would get only $320 to $400, far less than the average cost of three months of family health care coverage on the open market, the workers said in a letter to the Boston-based firm on Monday. They asked for at least $1,500 per former employee.
“The financial challenges faced by Art Van employees now are severe,” they said in the letter, which was reviewed by Bloomberg News. They also cited Thomas H. Lee’s $26 billion in assets under management and its executives’ report of having invested $335 million of their own capital in the firm’s newest funds.
“Compared to the acute hardship facing Art Van employees, THL is in a position to make a real difference to these and all former employees,” they said.
Robin Weinberg, a spokeswoman for the firm, said Tuesday that it had lost its entire investment in Art Van but was still offering the relief fund of as much as $1 million, plus another $1 million in a dollar-for-dollar match of money raised from other parties. Thomas H. Lee bought Art Van in 2017 from founder Art Van Elslander for $612.5 million.
“It is our hope that other Art Van stakeholders, who previously profited from the sale of Art Van or from doing business with the company, including Art Van’s creditors, will join us in contributing to this fund to help former employees,” the firm said in a statement Weinberg sent.
The standoff calls to mind the loss of thousands of jobs in the recent bankruptcies of Toys R Us Inc. and Shopko Stores Inc. Workers organized to demand severance payments, enlisting the help of politicians like Senator Elizabeth Warren of Massachusetts, Senator Tammy Baldwin of Wisconsin and representatives Alexandria Ocasio-Cortez and Rashida Tlaib, of New York and Michigan.
The depredations of the coronavirus, meanwhile, have highlighted the vulnerability of retail and other front-line workers who lost their jobs amid a nationwide shutdown, unable to work remotely. Even as the country begins to slowly reopen, tens of millions of Americans are still out of work, and it’s unclear how much consumer spending and the willingness to shop in person will rebound.
Art Van filed for bankruptcy in March, telling workers they would have 90 days of coverage as it slowly sold off its stores. But as the coronavirus spread, the liquidation proved more of a fire sale, and the company told employees they would lose their insurance about six weeks earlier than planned.
For Shirley Smith of Detroit, who worked at Art Van for 23 years, most recently as a sales manager, the realization came as she went to fill a prescription for insulin and learned that her benefits had expired. Instead of her usual $40 co-pay, the pharmacy wanted $1,500 for a 28-day supply. She scrambled to sign up for a plan through an Obamacare marketplace that allowed her to buy the drug for $480, plus a monthly premium of around $350.
The firm’s offer is an “insult” to the workers, Smith said.
The former Art Van staffers, who received no severance when the chain dismissed them, are demanding the firm give them the 90 days of health care coverage it promised and create a separate fund for out-of-pocket medical costs incurred since the chain filed for bankruptcy. In an April email to Bloomberg, Tlaib called for the firm to provide the coverage the workers expected.
United for Respect, an advocacy group that supported former Art Van workers in negotiations with the firm, said the two sides are still talking after holding virtual meetings to discuss the workers’ requests.
Smith now finds herself on the job market at 60, competing with workers decades younger in the midst of the biggest economic shock since the Great Depression.
“I loved my job, and this company came in and destroyed it,” she said.
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