A wave of retail bankruptcies washing through court has revived an old debate about the role of private-equity firms in accelerating the problems of companies in distress, the Wall Street Journal reported today. Payless ShoeSource Inc., Gymboree Corp., rue21 Inc. and True Religion Apparel Inc. were all acquired by private-equity firms during the past decade. Now, lawyers for creditors have questioned whether private-equity firms share blame for the retailers’ financial collapse, in some cases by loading debt on the companies. Since 2010, more than $90 billion in leveraged loans and high-yield bonds were raised for private-equity-owned retail borrowers to make dividend payouts to their investors, according to LCD, a part of S&P Global Market Intelligence. That is in addition to the leverage often assumed in the buyout itself.
