Private equity firm grants $2 million relief fund to ex-employees of Art Van Furniture
In the complex world of retail, the influence of private equity firms has been a subject of much debate. A recent study and numerous reports have highlighted a troubling trend: private equity ownership in the U.S. retail sector often increases the risk of bankruptcy for acquired companies and is frequently associated with job losses.
Take the case of Art Van, a furniture retailer that filed for bankruptcy in 2020. After its acquisition by private equity firm Thomas H. Lee, the company took on a significant debt load and underwent a rapid expansion. This financial burden, combined with cost-cutting measures, led to layoffs and other hardships for Art Van's employees, even in the midst of a global pandemic.
Despite these challenges, private equity firms do not necessarily lose money on their investments, even when retailers close stores or fully liquidate. In fact, following Art Van's bankruptcy filing, private equity firms have been active in buying its store portfolio. Onyx Partners, for instance, acquired 119 J.C. Penney stores for $947 million in 2025.
The situation has led to a push for legislation to curb the impact of private equity on retail. Democratic Sen. Elizabeth Warren has sponsored a bill aimed at increasing liabilities for private equity firms, with eligible employees of bankrupt retailers like Art Van potentially receiving $1,200 each from a proposed hardship fund. Shirley Smith, a former Art Van sales manager, has been involved in this push.
However, it's important to note that the COVID-19 pandemic is not explicitly mentioned as a cause for the bankruptcies or liquidations of retailers like Art Van. Since 2016, dozens of private equity-owned retailers have gone bankrupt, a trend that has been exacerbated by the combination of high debt loads from leveraged buyouts and rapid changes in the retail world.
The story of Art Van is not unique. Many of these bankrupt retailers, like Belk and Nine West, have liquidated in bankruptcy. Even Loves Furniture, the retailer that took over some of Art Van's best leases, has since gone bankrupt.
Art Van employees, working with United for Respect, a worker activist group focused on the retail industry, have been vocal about their struggles. They have not received health insurance, a paycheck, or severance pay during these difficult times. In response, Thomas H. Lee Partners, the private equity firm behind Art Van's acquisition, added $1 million to a hardship fund for former Art Van employees, bringing the total to $2 million.
As retail ownership and restructuring continue to be driven by private equity interests, it's clear that this issue warrants further attention and potential legislative action to protect workers and stabilize the retail sector.
- The debt load and rapid expansion induced by a private equity firm's acquisition, as seen in the case of Art Van, can escalate the risk of bankruptcy and result in job losses.
- In the midst of a global pandemic, these financial burdens and cost-cutting measures can lead to hardships for employees, such as layoffs.
- Although retail bankruptcies and liquidations are not always attributed to the pandemic, the trend of private equity ownership in retail has been ongoing since 2016, with dozens of retailers filing for bankruptcy.
- The push for legislation seeks to increase liabilities for private equity firms and establish a hardship fund for eligible employees of bankrupt retailers like Art Van.
- Amidst the push for legislative action, worker activist groups like United for Respect continue to advocates for employees' rights in the retail industry, addressing issues such as healthcare, wages, and severance pay.
