Private Equity Using Back Floating Rate Loans to kill Business

Private Equity Using Back Floating Rate Loans to Kill Business

“For movie theaters, for the communal experience” is “an outmoded idea,” Netflix CEO Ted Sarandos told Time Magazine, “I think it is — for most people, not for everybody,” he would add………..or how about……….“I think there is a world market for maybe five computers.”

Thomas Watson, president of IBM, said in 1943. By the way, does everyone not know that top executives and CEOs earn $ 200 million per year, including a golden parachute? I’ll give corporate corruption one ounce of credit: they know how to make a lot of money, and that’s it.

In 2008, bankers and hedge fund owners bankrupted the world’s economy by making unethical bets, and they didn’t even hide their bad corporate corruption. Fast-forward to 2025, and they’re doing the same thing, but under the guise of private equity. More information can be found on the SPGlobal article called ‘PE-backed company bankruptcies in US reach record high in 2024’.

If one didn’t see the graph in this article (Angie’s Diary should post it too), in 2024, private equity bankrupted 110 companies and got away with it, too, like they are now. Just look at the graph on the SpGlobal link. That’s right, private equity bankrupted 110 businesses that were making money, and that includes financially successful stores, including Joann’s and the Hooters Restaurant chain.

If you are bored, take a look at the Canadian media. The Bay Department stores were liquidated, and that company, which had been in business for 350 years, laid off over 9,000 people across Canada. Any hoo, naturally, was private equity behind the Bay Department Store debacle? How did they do it? Over the last three years, private equity has taken out $ 3.8 trillion in adjustable-rate loans.

Every 30 to 60 days, every loan from these firms has been stacked onto the ledgers of companies like Joann’s, Hooters, and the Bay Department store chain, burying them in red ink. That’s why these once successful companies are going bankrupt right before our very eyes, even though they were still making money. Corporate corruption is driving them out of business because big businesses are forcing them to pay off the adjustable-rate loans.

If one thinks, the horror ends there…For one thing, why would the banks give these risky loans, knowing they’re going to fail? The answer is that the banks repackage these adjustable-rate loans (known as CLOs) and it is repackaged and sold off to our pension system as debt—and they are sugar-coating this by telling everyone: “You’re diversifying your portfolio, buddy!” Thus, business bankruptcies have skyrocketed, and adjustable-rate loans are a significant contributing factor.

If one examines the 2008 financial crisis, there were $ 1.1 trillion in adjustable-rate loans; however, by 2025, that same debt had grown to $ 3.8 trillion. So, subprime mortgages amounted to 1.3 trillion, and everything was held by private equity and the same crowd that brought you the 2008 meltdown now owns the most significant number of houses, apartments, major land holdings galore—it’s not just housing.

Thus, if private equity had not interfered with bankruptcies, these 110 businesses (and counting) would not be debt-ridden and underwater. Thousands of employees now have no job, no pension, and private equity is doing this because they know the banks would not be bailed out again. In the US, there are no regulatory bodies or laws to stop private equity from doing this.

Greed motivates corporate corruption to accumulate cheap debt, and they believe zero percent interest is here to stay. They took adjustable-rate loans, allowing them to refinance forever, and were able to secure larger loans because the bigger debt would accrue interest at a lower rate.

The banks were happy to give them these loans because the banker would also earn bigger fees and write it off, too, and it would not be on the bank’s ledger either. Private equity even wrote the contracts to say they never owned these firms but were onboard in an advisory position, no employers, and they even sold the lands from under these companies, enabling them to earn more money (you guessed it) at the expense of those 110-plus firms that have gone under.

Therefore, the banks are not to blame or affected because they have passed the debt on to the pensions. More importantly, these pensions put the debt on the books; they can project the value of the debt on the companies in question for up to 10 years, and during that time, the bad debt comes crashing down. In the end, we’ve allowed Wall Street and the Big Banks to make an enormous fortune on bankrupting once successful companies.

Adjustable-rate debts will cause a domino effect, and the House of Cards will fall. Private Equity functions in such a way because they exist under a Carried Interest Loophole and… it will be surprising to some, President Trump, oddly enough, is the only one talking about this… ft.com, and nytimes.com