The First Big Score

Killing Toys R Us for Profit

It should have been a comeback story.

In 2005, Toys R Us was still a titan:

• A household name.

• Profitable.

• Beloved by generations of American families.

Sure, online shopping was starting to grow, and Walmart and Target were squeezing margins.
But Toys R Us had something they didn’t: a brand synonymous with childhood itself.

There was no fatal flaw in the business model.
No inevitable Amazon-driven doom.

The company was still standing — battered, maybe, but alive.

And that’s when the wolves closed in.

The Buyout

In 2005, a trio of private equity giants — Bain Capital, KKR, and Vornado Realty Trust — swooped in with an offer:
Take Toys R Us private.
“Streamline” operations.
“Modernize” the business.
Make it more “nimble” and “competitive.”

It sounded like a lifeline.
Instead, it was the beginning of the end.

The new owners loaded Toys R Us with $5 billion in debt — debt the company never asked for, never needed, and could never escape.

Most of the company’s profits — hundreds of millions of dollars a year — didn’t go toward modernizing stores or competing online.
They went toward servicing the crushing interest payments on the buyout debt.

Toys R Us wasn’t failing.
It was being bled dry.

The Squeeze

By 2007, Toys R Us was spending more than half a billion dollars a year just paying interest on its debts.

Meanwhile:

• Store shelves stayed outdated.

• E-commerce investments lagged.

• Staff cuts eroded customer service.

• Suppliers were pushed to offer harsher terms just to stay stocked.

It was a death spiral — not because customers abandoned Toys R Us, but because private equity stripped away its ability to fight back.

And all the while, Bain, KKR, and Vornado collected millions in “management fees” — profiting off the very company they were dragging toward the grave.

The Collapse

In 2017, Toys R Us finally filed for bankruptcy.

Not because people stopped loving toys.
Not because e-commerce made brick-and-mortar retail impossible.
But because private equity had loaded the company with a financial bomb, and there was no way to defuse it.

When Toys R Us collapsed:

• More than 30,000 workers lost their jobs.

• Thousands of suppliers and small businesses took devastating hits.

• Communities lost vital anchor stores — hastening the decline of shopping centers across the country.

Executives walked away with bonuses.
Private equity firms walked away with profits.

The workers walked away with nothing.

---

Today, in False Promises, we explored The Labor Shortage They Created — how short-sighted policies, attacks on workers, and deliberate neglect of the real economy hollowed out America’s workforce.

The collapse of Toys R Us is a perfect, brutal example.

• Good jobs destroyed.

• Communities abandoned.

• A whole generation of workers and consumers betrayed — not by technology, not by globalization, but by greed weaponized through finance.

This wasn’t creative destruction.
It wasn’t inevitable.

It was a hit job.
And Toys R Us was just the first score.

---

Coming up tomorrow:

Collateral Damage: JoAnn Fabrics and the Death of Main Street.

(Because sometimes the heist doesn’t make headlines — it just quietly kills your town’s last good store.)

The Playbook

How to Gut a Company and Get Away With It

There’s no smash-and-grab.
No gunmen in ski masks.
No vaults blown open at midnight.

The private equity heist is quieter.
More technical.
More devastating.

And it starts with a move so clever, so simple, most people never even notice it’s happening.

You buy a company — not with your own money — but with the company’s.

It’s called a leveraged buyout, but it might as well be called what it is: a hostage situation.

The private equity firm promises new investment, new growth, new prosperity.
In reality, they’re tying the company to a ticking debt bomb — and lighting the fuse.

Once the ink is dry, the “new owners” owe almost nothing.
The company owes everything.

And that’s just the beginning.

Here’s how the playbook works — step-by-step:

Step 1: Load Up the Debt

The first rule of the heist: always use someone else’s money.

The private equity firm buries the company under staggering debt — sometimes several times its actual value — using its own buildings, land, equipment, even intellectual property as collateral.
It’s like taking out a second mortgage on a house you already own… and handing the deed to someone else.

Suddenly, a stable, profitable business is forced into survival mode.
Debt service becomes the priority.
Growth, innovation, long-term planning — all of it is put on hold.
The company isn’t working for customers or communities anymore.
It’s working for the bankers.

Step 2: Slash and Burn

Debt pressure is a feature, not a bug.

• Stores close.

• Workers are laid off.

• Pay freezes, benefits disappear, pensions evaporate.

• Maintenance and modernization are deferred indefinitely.

Anything that costs money — anything that supports workers, customers, or communities — is slashed in the name of “efficiency.”

And if the company owns valuable assets, like real estate?
Those are sold off too — often in sweetheart deals that benefit the private equity firm or its allies.

What’s left is a stripped-down shell, more fragile with each passing quarter.

Step 3: Milk the Host

Before the company stumbles, the private equity firm moves in to collect its winnings.

They pay themselves “management fees” for consulting services.
They pay themselves “advisory fees” for overseeing the damage.
They sometimes even force the company to take on even more debt to issue “special dividends” directly into the pockets of investors.

It’s the business equivalent of taking out a payday loan — not to keep the lights on, but to throw a party for the landlord.

And if the company starts slipping toward bankruptcy?
Doesn’t matter.
The private equity firm has already been paid.

Step 4: Sell It, Burn It, or Let It Die

Once the host is drained — once the debt burden becomes unsustainable — the final phase begins.

Maybe they flip the company to another buyer, spinning the story of “turnaround potential.”
Maybe they take it public, dumping shares on unsuspecting investors.
Maybe they simply walk away, letting the company collapse into bankruptcy court, taking workers’ pensions and unpaid suppliers with it.

In every scenario, the private equity firm gets away with the loot.

The workers?
Out of jobs.

The retirees?
Out of pensions.

The communities?
Left with empty malls, abandoned factories, and broken promises.

---

Today, in False Promises, we examined the False Promise of Tariffs — how broad, poorly targeted tariffs are raising costs for American businesses without delivering real local benefit. Instead of protecting workers or rebuilding industry, they’re making it harder for companies to survive — while doing nothing to address the underlying rot.

Private equity runs the same kind of scam.

They promise to rescue companies.
In reality, they load them down with debt, strip them of assets, and leave them weaker than before — all while walking away richer.

In both cases, the price is paid by the very people the promises were supposed to help.

---

Coming up tomorrow:

The First Big Score: Killing Toys R Us for Profit.

(The inside story of how Wall Street took down a beloved American brand — and why no one ever paid the price.)

The Setup

How Wall Street Plotted the Perfect Crime

No alarms were triggered. No headlines screamed.
There was no raid, no getaway car, no televised trial.
But across America, a silent heist was already underway.

The clues were scattered in plain sight:

• Shuttered toy stores.

• Empty shopping plazas.

• Small-town hospitals closing their doors.

• Workers showing up one morning to find their jobs — and pensions — gone.

At first, it was easy to explain away.
“That’s just the market,” they said.
“Amazon is killing retail,” they shrugged.
“Healthcare is complicated.”

But beneath the surface, something more deliberate was unfolding.
A new kind of predator had emerged — one that didn’t need to invent, build, or serve.
Private equity firms had found a way to hijack the real economy, stripping value from companies, communities, and workers without ever facing consequences.

They would buy healthy businesses, saddle them with crushing debt, extract every ounce of cash they could, and abandon the wreckage — often while walking away with fortunes.

It was the perfect crime.
Legal. Invisible. Systematic.
And it would quietly help unravel the economic foundations that millions of Americans had spent generations building.

---

Today, in False Promises, we began with Unraveling Pax Americana — tracing how short-term thinking, corruption, and political cowardice are actively weakening America’s standing in the world.

The heist unfolding inside corporate America mirrors this collapse.

While Washington is chasing quick wins and easy slogans, private equity firms are dismantling the companies that once formed the backbone of American life:

• The local retailers that anchored neighborhoods.

• The hospitals that kept rural America alive.

• The manufacturers that provided stable, middle-class jobs.

These businesses weren’t collapsing under the weight of global competition or innovation.

They were deliberately targeted — stripped for cash, loaded with debt, and left to fail.

Because when trust crumbles and grifters run the show, the only thing left to do is loot the place before the lights go out.

In this series, we’ll trace the blueprint of the heist:

• The tools they used.

• The targets they chose.

• The victims they left behind.

Because America didn’t lose Toys R Us, JoAnn Fabrics, your local hospitals, or hundreds of other businesses by accident.

They were sold for parts.
And the getaway is still happening.

---

Coming up tomorrow:

The Playbook: How to Gut a Company and Get Away With It.

(Once you see how it works, you’ll never look at a “buyout” the same way again.)