[voidmain]

I'm familiar with this narrative, I'm saying that the evidence in the article, though the article is written by someone sympathetic to this point of view, contradicts it. The PE firms, despite their huge fees, lost a boatload of money. No one wanted to buy the business out of bankruptcy for more than it was worth piecemeal. There are easily identifiable reasons (Walmart, Amazon) why the competitive landscape is much tougher than when it was a profitable business. It sounds to me like the PE firms did a lot of harm by keeping the company from bankruptcy for so long.

In general, if a business is clearly profitable it should continue no matter how thoroughly you screw up the capital structure: the worst case is a bankruptcy in which the shareholders get nothing, the debt holders get very little, and a new capital structure gets created. When this doesn't happen, it's because the business is worthless or nearly so.

[jwlato]

The financials aren't publicly available, but I'd expect PE firms still made money here. The funds probably lost money, but funds are an investment vehicle separate from the managing entity.

I disagree that profitable businesses can continue no matter the capital structure. You're assuming that there's a liquid market for businesses, or parts of them. For a huge retailer that's almost certainly not true. Additionally, the current owners have to actually want the business to continue. I would believe there's more value to a short-term owner in liquidating assets than accruing profits over a relatively short timeframe.